File No. 33-48489
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
POST-EFFECTIVE
AMENDMENT NO. 6
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
ADVANTAGE GROWTH AND TREASURY SECURITIES TRUST, SERIES 1
(Exact Name of Trust)
NIKE SECURITIES L.P.
(Exact Name of Depositor)
1001 Warrenville Road
Lisle, Illinois 60532
(Complete address of Depositors principal executive offices)
NIKE SECURITIES L.P. CHAPMAN AND CUTLER
Attn: James A. Bowen Attn: Eric F. Fess
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and complete address of agents for service)
It is proposed that this filing will become effective (check
appropriate box)
: : immediately upon filing pursuant to paragraph (b)
: x : July 31, 1998
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule (485 or 486)
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
the issuer has registered an indefinite amount of securities. A
24f-2 Notice for the offering was last filed on June 19, 1998.
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
2,335,897 UNITS
PROSPECTUS
Part One
Dated July 27, 1998
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
The Trust
The Advantage Growth and Treasury Securities Trust (the "Trust") is a unit
investment trust consisting of a portfolio of "zero coupon" U.S. Treasury
bonds (treasury obligations) and shares of The Advantage Growth Fund
("Advantage Growth"). Advantage Growth is an open-end diversified management
investment company, commonly known as a mutual fund. At June 16, 1998, each
Unit represented a 1/2,335,897 undivided interest in the principal and net
income of the Trust (see "The Trust" in Part Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price
The Public Offering Price per 1,000 Units is equal to the aggregate value of
the Securities in the Portfolio of the Trust divided by the number of Units
outstanding, multiplied by 1,000, plus a sales charge of 4.5% of the Public
Offering Price (4.712% of the amount invested). At June 16, 1998, the Public
Offering Price per 1,000 Units was $1,449.90 (see "Public Offering" in Part
Two). The minimum purchase is $1,000.
Please retain both parts of this Prospectus for future reference.
_____________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
_____________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 16, 1998
Sponsor: Nike Securities L.P.
Evaluator: First Trust Advisors L.P.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Aggregate Maturity Value of Treasury Obligations in the Trust $2,339,000
Aggregate Number of Shares of Advantage Growth in the Trust 63,775.261
Number of Units 2,335,897
Fractional Undivided Interest in the Trust per Unit 1/2,335,897
Public Offering Price:
Aggregate Value of Securities in the Portfolio $3,234,407
Aggregate Value of Securities per 1,000 Units $1,384.65
Sales Charge 4.712% (4.5% of Public Offering Price) $65.25
Public Offering Price per 1,000 Units $1,449.90
Redemption Price and Sponsor's Repurchase Price per 1,000
Units ($65.25 less than the Public Offering Price per
1,000 Units) $1,384.65
</TABLE>
Date Trust Established July 22, 1992
Mandatory Termination Date February 15, 2003
Evaluator's Annual Fee: $.20 per $1,000 principal amount of Treasury
Obligations outstanding. Evaluations for purposes of sale, purchase or
redemption of Units are made as of the close of trading (4:00 p.m. Eastern
time) on the New York Stock Exchange on each day on which it is open.
Supervisory fee payable to Maximum of $.15 per 1,000
an affiliate of the Sponsor Units outstanding annually
Trustee's Annual Fee: $.85 per 1,000 Units outstanding.
Record Date: Five business days after Advantage Growth's ex-dividend date.
Distribution Date: Ten business days after Advantage Growth's distribution
date.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of The Advantage Growth and
Treasury Securities Trust, Series 1
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of The Advantage Growth and Treasury Securities
Trust, Series 1 as of March 31, 1998, and the related statements of operations
and changes in net assets for each of the three years in the period then
ended. These financial statements are the responsibility of the Trust's
Sponsor. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of March 31, 1998, by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Advantage Growth and
Treasury Securities Trust, Series 1 at March 31, 1998, and the results of its
operations and changes in its net assets for each of the three years in the
period then ended, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
July 2, 1998
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at market value (cost, including
accretion on the treasury obligations,
$2,773,994) (Note 1) $3,445,204
Cash 3,935
__________
3,449,139
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Accrued liabilities 740
__________
Net assets, applicable to 2,449,829
outstanding units of fractional
undivided interest:
Cost of Trust assets, including
accretion on the treasury obligations
(Note 1) $2,773,994
Net unrealized appreciation (Note 2) 671,210
Distributable funds 3,195
__________
$3,448,399
==========
Net asset value per 1,000 units $1,407.61
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
PORTFOLIO
March 31, 1998
<TABLE>
<CAPTION>
Maturity Market
value Name of Issuer and Title of Security value
<C> <S> <C>
"Zero Coupon" U.S. Treasury bonds
$2,453,000 (1) maturing February 15, 2003 $1,860,627
==========
</TABLE>
<TABLE>
<CAPTION>
Shares
<C> <S> <C>
66,888.261 The Advantage Growth Fund 1,584,577
__________
Total investments $3,445,204
==========
</TABLE>
(1) The Treasury Obligations have been purchased at a discount from their
par value because there is no stated interest income thereon (such
securities are often referred to as U.S. Treasury zero coupon bonds).
Over the life of the treasury obligations the value increases, so that
upon maturity the holders will receive 100% of the principal amount
thereof.
See accompanying notes to financial statements.
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended March 31,
1998 1997 1996
<S> <C> <C> <C>
Interest income $133,524 152,259 176,874
Dividends:
Ordinary income 16,972 11,208 195,744
Capital gain 61,429 68,495 254,318
___________________________________________
Total investment income 211,925 231,962 626,936
Expenses:
Trustee's fees and related
expenses (4,469) (5,409) (9,947)
Evaluator's fees (552) (734) (881)
Supervisory fees (414) (566) (630)
___________________________________________
Total expenses (5,435) (6,709) (11,458)
___________________________________________
Investment income - net 206,490 225,253 615,478
Net gain (loss) on investments:
Net realized gain (loss) 97,933 84,397 (220,623)
Change in net unrealized
appreciation or
depreciation 444,886 35,604 394,635
___________________________________________
542,819 120,001 174,012
___________________________________________
Net increase in net assets
resulting from operations $749,309 345,254 789,490
===========================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended March 31,
1998 1997 1996
<S> <C> <C> <C>
Net increase in net assets
resulting from operations:
Investment income - net $206,490 225,253 615,478
Net realized gain (loss) on
investments 97,933 84,397 (220,623)
Change in net unrealized
appreciation or depreciation
on investments 444,886 35,604 394,635
__________________________________________
749,309 345,254 789,490
Units redeemed (479,578, 952,547
and 731,524 in 1998, 1997 and
1996, respectively) (633,311) (1,064,442) (816,428)
Distributions to unit holders:
Investment income - net (13,040) (2,256) (186,754)
Principal from investment
transactions (59,320) (68,474) (265,473)
__________________________________________
(72,360) (70,730) (452,227)
__________________________________________
Total increase (decrease) in net
assets 43,638 (789,918) (479,165)
Net assets:
At the beginning of the year 3,404,761 4,194,679 4,673,844
__________________________________________
At the end of the year
(including distributable
funds) applicable
to Trust units of $3,195,
$7,441 and $5,319 at
March 31, 1998, 1997 and
1996, respectively) $3,448,399 3,404,761 4,194,679
==========================================
Trust units outstanding at
the end of the year 2,449,829 2,929,407 3,881,954
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
The treasury obligations are stated at values as determined by First Trust
Advisors L.P. (the Evaluator), an affiliate of the Sponsor. The values are
based on (1) current bid prices for the securities obtained from dealers or
brokers who customarily deal in securities comparable to those held by the
Trust, (2) current bid prices for comparable securities, (3) appraisal or (4)
any combination of the above.
Shares of The Advantage Growth Fund (Advantage Growth) are stated at Advantage
Growth's published net asset value as reported by the Evaluator. Net asset
value is determined by dividing the value of Advantage Growth's securities
plus any cash and other assets (including accrued interest and dividends
receivable) less all liabilities (including accrued expenses) by the number of
shares outstanding, adjusted to the nearest whole cent.
Investment income -
Dividends from the Advantage Growth shares are recorded on Advantage Growth's
ex-dividend date. Interest income consists of amortization of original issue
discount and market discount or premium on the treasury obligations. Such
amortization is included in the cost of treasury obligations rather than in
distributable funds because it is not currently available for distribution to
unit holders.
Security cost -
Cost of the Trust's treasury obligations is based on the offering price of the
treasury obligations on the dates the treasury obligations were deposited in
the Trust, plus amortization of original issue discount and amortization of
market discount or premium. Cost of the Advantage Growth shares is based on
the net asset value of such shares on the dates the shares were deposited in
the Trust. The cost of securities sold is determined on the average cost
method. Sales of securities and fund shares are recorded on the trade date.
Federal income taxes -
The Trust is not taxable for Federal income tax purposes. Each unit holder is
considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.
Expenses of the Trust -
The Trust pays a fee for Trustee services which is based on $.85 per annum per
1,000 units outstanding based on the largest aggregate number of units
outstanding during the calendar year. Prior to September 1, 1995, the Trustee
was United States Trust Company of New York; effective September 1, 1995, The
Chase Manhattan Bank succeeded United States Trust Company of New York as
Trustee. The Evaluator will receive an annual fee based on $.20 per $1,000
principal amount of treasury obligations outstanding. Additionally, the Trust
pays recurring financial reporting costs and an annual supervisory fee payable
to an affiliate of the Sponsor.
<PAGE>
2. Unrealized appreciation and depreciation
An analysis of net unrealized appreciation at March 31, 1998 follows:
<TABLE>
<CAPTION>
Advantage
Treasury Growth
obligations shares Total
<S> <C> <C> <C>
Unrealized appreciation $127,055 544,155 671,210
Unrealized depreciation - - -
____________________________________
$127,055 544,155 671,210
====================================
</TABLE>
3. Other information
Cost to investors -
The cost to initial investors of units of the Trust was based on the aggregate
offering price of the treasury obligations and the net asset value of the
Advantage Growth shares on the date of an investor's purchase, plus a sales
charge of 5.0% of the public offering price which is equivalent to
approximately 5.263% of the net amount invested.
Distributions to unit holders -
Distributions to unit holders are made ten business days after Advantage
Growth's distribution date.
<PAGE>
Selected data per 1,000 units of the Trust
outstanding throughout each year -
<TABLE>
<CAPTION>
Year ended March 31,
1998 1997 1996
<S> <C> <C> <C>
Investment income -
interest and dividends $76.76 68.82 149.11
Expenses (1.97) (1.99) (2.72)
_________________________________________
Investment income - net 74.79 66.83 146.39
Distributions to unit holders:
Investment income - net (4.77) (.73) (46.60)
Principal from investment
transactions (21.70) (22.16) (66.38)
Net gain (loss) on investments 197.02 37.77 34.07
_________________________________________
Total increase (decrease)
in net assets 245.34 81.71 67.48
Net assets:
Beginning of the year 1,162.27 1,080.56 1,013.08
_________________________________________
End of the year $1,407.61 1,162.27 1,080.56
=========================================
</TABLE>
Investment income - interest and dividends, Expenses and Investment income -
net per 1,000 units have been calculated based on the weighted average number
of units outstanding during each year (2,760,793, 3,370,593 and 4,204,454
units during the years ended March 31, 1998, 1997 and 1996, respectively).
Distributions to unit holders of investment income - net per 1,000 units
reflects the Trust's cash distributions of approximately $4.77 per 1,000 units
to 2,733,662 units on January 14, 1998, approximately $.73 per 1,000 units to
3,089,998 units on January 15, 1997, approximately $.94 per 1,000 units to
4,411,064 units on July 7, 1995 and approximately $45.66 per 1,000 units to
3,999,288 units on January 19, 1996. Distributions of principal from
investment transactions reflect the Trust's cash distributions of
approximately $21.70 per 1,000 units to 2,733,662 units on January 14, 1998,
approximately $22.16 per 1,000 units to 3,089,998 units on January 15, 1997
and approximately $66.38 per 1,000 units to 3,999,288 units on January 19,
1996.
<PAGE>
THE ADVANTAGE GROWTH AND
TREASURY SECURITIES TRUST, SERIES 1
PART ONE
Must be Accompanied by Part Two
___________________
P R O S P E C T U S
___________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Carter, Ledyard & Milburn
TO TRUSTEE: 2 Wall Street
New York, New York 10005
INDEPENDENT Ernst & Young LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any jurisdiction to any person to whom it is not
lawful to make such offer in such jurisdiction.
This Prospectus does not contain all the information set forth in the
registration statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
THE ADVANTAGE GROWTH AND TREASURY SECURITIES TRUST
PROSPECTUS NOTE: THIS PART TWO PROSPECTUS MAY
Part Two ONLY BE USED WITH PART ONE
Dated July 31, 1997
The Trust. The Advantage Growth and Treasury Securities Trust (the
"Trust") is a unit investment trust consisting of a portfolio of zero
coupon U.S. Treasury bonds and shares of The Northstar Growth Fund
("Northstar Growth"). The Northstar Growth Fund was formerly known as
the Northstar Advantage Growth Fund. Northstar Growth is an open-end
diversified management investment company, commonly known as a mutual
fund.
The objective of the Trust is to protect Unit holders' capital by
investing a portion of the Trust's portfolio in zero coupon U.S.
Treasury bonds ("Treasury Obligations") and to provide for potential
capital appreciation by investing a portion of the Trust's portfolio in
shares of Northstar Growth. Collectively the Treasury Obligations and
the Northstar Growth shares are referred to herein as the "Securities."
See "Portfolio" in Part One. Northstar Growth's primary investment
objective is to obtain long-term growth of capital. As a secondary
objective, Northstar Growth also seeks income. Northstar Growth invests
principally in common stocks of companies which are listed on the
domestic securities exchanges or are traded in the domestic over-the-
counter markets, but may, to a limited extent, invest in securities
traded in markets outside the United States. Northstar Growth may also
invest in preferred stocks and convertible securities issued by such
companies. The Trust has a termination date as set forth in "Summary of
Essential Information" in Part One. The Treasury Obligations evidence
the right to receive a fixed payment at a future date from the U.S.
Government and are backed by the full faith and credit of the U.S.
Government. The guarantee of the U.S. Government does not apply to the
market value of the Treasury Obligations or the Units of the Trust,
whose net asset value will fluctuate and, prior to maturity, may be
worth more or less than a purchaser's acquisition cost. There is, of
course, no guarantee that the objective of the Trust will be achieved.
Each Unit of the Trust represents an undivided fractional interest in
all the Securities deposited in the Trust. The Trust has been organized
so that purchasers of Units should receive, at the termination of the
Trust, an amount per Unit at least equal to $1.00 (which is equal to the
per Unit value upon maturity of the Treasury Obligations), even if the
Trust never paid a dividend and the value of the Northstar Growth shares
were to decrease to zero, which the Sponsor considers highly unlikely.
This feature of the Trust provides Unit holders who purchase Units at a
price of $1.00 or less per Unit with total principal protection,
including any sales charges paid, although they might forego any
earnings on the amount invested. To the extent that Units are purchased
at a price less than $1.00 per Unit, this feature may also provide a
potential for capital appreciation. UNIT HOLDERS DISPOSING OF THEIR
UNITS PRIOR TO THE MATURITY OF THE TRUST MAY RECEIVE MORE OR LESS THAN
$1.00 PER UNIT, DEPENDING ON MARKET CONDITIONS ON THE DATE UNITS ARE
SOLD OR REDEEMED.
The Treasury Obligations deposited in the Trust will mature on the date
listed in "Portfolio" appearing in Part One. The Treasury Obligations in
the Trust had a maturity value equal to or greater than the aggregate
Public Offering Price (which includes the sales charge) of the Units of
the Trust on the Initial Date of Deposit. The Northstar Growth shares
deposited in the Trust's portfolio have no fixed maturity date and the
net asset value of the shares will fluctuate. See "Portfolio" appearing
in Part One.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
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 1
Public Offering Price. The secondary market Public Offering Price per
Unit will be based upon a pro rata share of the bid prices of the
Treasury Obligations and the net asset value of the Northstar Growth
shares in the Trust plus or minus a pro rata share of cash, if any, in
the Principal Account of the Trust plus a maximum sales charge as set
forth in "Summary of Essential Information" in Part One. The minimum
purchase is that amount set forth in Part One. The sales charge is
reduced on a graduated scale for sales involving at least that amount
set forth in Part One. See "How is the Public Offering Price Determined?"
Dividend and Capital Distributions. Distributions, if any, of net
income, other than amortized discount, will be made at least annually.
Distributions of realized capital gains, if any, received by the Trust,
will be made whenever Northstar Growth makes such a distribution. Any
distribution of income and/or capital will be net of the expenses of the
Trust. INCOME WITH RESPECT TO THE ACCRUAL OF ORIGINAL ISSUE DISCOUNT ON
THE TREASURY OBLIGATIONS WILL NOT BE DISTRIBUTED CURRENTLY, ALTHOUGH
UNIT HOLDERS WILL BE SUBJECT TO INCOME TAX AT ORDINARY INCOME RATES AS
IF A DISTRIBUTION HAD OCCURRED. See "What is the Federal Tax Status of
Unit Holders?" Additionally, upon termination of the Trust, the Trustee
will distribute, upon surrender of Units for redemption, to each Unit
holder his pro rata share of the Trust's assets, less expenses, in the
manner set forth under "Rights of Unit Holders-How are Income and
Principal Distributed?"
Reinvestment. Each Unit holder will, unless he elects to receive cash
payments, have distributions of principal (including, if elected by Unit
holders, the proceeds received upon the maturity of the Treasury
Obligations in the Trust at termination), capital, if any, and income
earned by the Trust, automatically invested in shares of Northstar
Growth (if Units are properly registered) in the name of the Unit
holder. Such distributions (including, if elected by Unit holders, the
proceeds received upon the maturity of the Treasury Obligations in the
Trust at termination) will be reinvested without a sales charge or the
imposition of a contingent deferred sales load to the participant on
each applicable distribution date. See "Rights of Unit Holders-How Can
Distributions to Unit Holders be Reinvested?"
Secondary Market for Units. The Sponsor may maintain a market for Units
of the Trust and offer to repurchase such Units at prices which are
based on the aggregate bid side evaluation of the Treasury Obligations
and the aggregate net asset value of Northstar Growth shares in the
Trust plus or minus a pro rata share of cash, if any, in the Principal
Account of the Trust.
Page 2
THE ADVANTAGE GROWTH AND TREASURY SECURITIES TRUST
What is The Advantage Growth and Treasury Securities Trust?
The Advantage Growth and Treasury Securities Trust is a series of
investment companies created by the Sponsor under the name of The
Advantage Growth and Treasury Securities Trust, all of which are
generally similar but each of which is separate and is designated by a
different series number (the "Trust"). This series was created under the
laws of the State of New York pursuant to a Trust Agreement (the
"Indenture"), dated the Initial Date of Deposit, with Nike Securities
L.P. as Sponsor, The Chase Manhattan Bank as Trustee, First Trust
Advisors L.P. as Evaluator and Portfolio Supervisor.
The objective of the Trust is to protect Unit holders' capital by
investing a portion of the Trust's portfolio in zero coupon U.S.
Treasury bonds ("Treasury Obligations") and to provide for potential
capital appreciation by investing a portion of the Trust's portfolio in
shares of The Northstar Growth Fund ("Northstar Growth"). The Northstar
Growth Fund was formerly known as the Northstar Advantage Growth Fund.
The Treasury Obligations evidence the right to receive a fixed payment
at a future date from the U.S. Government and are backed by the full
faith and credit of the U.S. Government. The guarantee of the U.S.
Government does not apply to the market value of the Treasury
Obligations or the Units of the Trust, whose net asset value will
fluctuate and, prior to maturity, may be more or less than a purchaser's
acquisition cost. Northstar Growth is an open end mutual fund whose
primary investment objective is to obtain long-term growth of capital.
As a secondary objective, Northstar Growth also seeks income.
Collectively, the Treasury Obligations and Northstar Growth shares in
the Trust are referred to herein as the "Securities." There is, of
course, no guarantee that the objective of the Trust will be achieved.
The Trust has been organized so that purchasers of Units should receive,
at the termination of the Trust, an amount per Unit at least equal to
$1.00 per Unit (which is equal to the per Unit value upon maturity of
the Treasury Obligations), even if the Northstar Growth shares never
paid a dividend and the value of Northstar Growth shares in the Trust
were to decrease to zero, which the Sponsor considers highly unlikely.
The receipt of only $1.00 per Unit upon the termination of the Trust (an
event which the Sponsor believes is unlikely) represents a substantial
loss on a present value basis. Furthermore, the $1.00 per Unit in no
respect protects investors against diminution in the purchasing power of
their investment due to inflation (although expectations concerning
inflation are a component in determining prevailing interest rates,
which in turn determine present values). To the extent that Units of the
Trust are redeemed, the aggregate value of the Securities in the Trust
will be reduced and the undivided fractional interest represented by
each outstanding Unit of the Trust will increase. See "How May Units be
Redeemed?" The Trust has a Mandatory Termination Date as set forth under
"Summary of Essential Information" appearing in Part One.
What are the Expenses and Charges?
At no cost to the Trust, the Sponsor has borne all the expenses of
creating and establishing the Trust, including the cost of the initial
preparation, printing and execution of the Indenture and the
certificates for the Units, legal and accounting expenses, expenses of
the Trustee and other out-of-pocket expenses. The Sponsor will not
receive any fees in connection with its activities relating to the Trust.
First Trust Advisors, L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information" appearing in Part One, for
providing portfolio supervisory services for the Trust. Such fee is
based on the number of Units outstanding in the Trust on January 1 of
each year except during the year or years in which an initial offering
period occurs in which case the fee for a month is based on the number
of Units outstanding at the end of such month in such year.
The Evaluator will receive a fee as indicated in "Summary of Essential
Information" appearing in Part One. No fee is paid to the Evaluator with
respect to the Northstar Growth shares in the Trust.
The Trustee pays certain expenses of the Trust for which it is
reimbursed by the Trust. The Trustee will receive for its ordinary
recurring services to a Trust and for all normal expenses of the Trustee
incurred by or in connection with its responsibilities under the
Indenture, an annual fee computed at $.85 per annum per 1,000 Units in
the Trust outstanding based upon the largest aggregate number of Units
Page 3
of the Trust outstanding at any time during the year. For a discussion
of the services performed by the Trustee pursuant to its obligations
under the Indenture, reference is made to the material set forth under
"Rights of Unit Holders." Rule 12b-1 fees imposed on shares of Northstar
Growth held in the Trust, are rebated to the Trust, deposited in the
Income Account and are used to pay expenses of the Trust.
The Trustee's and the above described fees are payable from the Income
Account of the Trust to the extent funds are available and then from the
Principal Account of the Trust. Since the Trustee has the use of the
funds being held in the Principal and Income Accounts for payment of
expenses and redemptions and since such Accounts are noninterest-bearing
to Unit holders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to the Trust is expected to result from
the use of these funds.
Each of the above mentioned fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor.
The following additional charges are or may be incurred by the Trust:
all legal and annual auditing expenses of the Trustee incurred by or in
connection with its responsibilities under the Indenture; the expenses
and costs of any action undertaken by the Trustee to protect the Trust
and the rights and interests of the Unit holders; fees of the Trustee
for any extraordinary services performed under the Indenture;
indemnification of the Trustee for any loss, liability or expense
incurred by it without negligence, bad faith or willful misconduct on
its part, arising out of or in connection with its acceptance or
administration of the Trust; indemnification of the Sponsor for any
loss, liability or expense incurred without gross negligence, bad faith
or willful misconduct in acting as Depositor of the Trust; all taxes and
other government charges imposed upon the Securities or any part of the
Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated). The above expenses and the
Trustee's annual fee, when paid or owing to the Trustee, are secured by
a lien on the Trust. In addition, the Trustee is empowered to sell
Securities in the Trust in order to make funds available to pay all
these amounts if funds are not otherwise available in the Income and
Principal Accounts of the Trust except that the Trustee shall not sell
Treasury Obligations to pay Trust expenses.
The Indenture requires the Trust to be audited on an annual basis at the
expense of the Trust by independent auditors selected by the Sponsor. So
long as the Sponsor is making a secondary market for the Units, the
Sponsor is required to bear the cost of such annual audits to the extent
such cost exceeds $.50 per 1,000 Units. Unit holders of the Trust
covered by an audit may obtain a copy of the audited financial
statements upon request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as
"capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986 (the
"Code"). Unit holders should consult their tax advisers in determining
the Federal, state, local and any other tax consequences of the
purchase, ownership and disposition of Units in the Trust. For purposes
of the following discussion and opinions, it is assumed that the shares
of Northstar Growth represent shares in an entity treated as a regulated
investment company for Federal income tax purposes.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of the assets of the Trust under the Code;
the income of the Trust will be treated as income of the Unit holders
thereof under the Code; and each Unit holder will be considered to have
received his pro rata share of income derived from each Trust asset when
such income is considered to be received by the Trust.
2. Each Unit holder will have a taxable event when the Trust disposes
of a Security (whether by sale, exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unit holder.
The price a Unit holder pays for his Units, including sales charges, is
allocated among his pro rata portion of each Security held by the Trust
(in proportion to the fair market values thereof on the valuation date
nearest the date the Unit holder purchases his Units) in order to
Page 4
determine his initial tax basis (before adjustment for accrual of
original issue discount) for his pro rata portion of each Security held
by the Trust. It should be noted that certain legislative proposals have
been made which could affect the calculation of basis for Unit holders
holding securities that are substantially identical to the Securities.
Unit holders should consult their own tax advisors with regard to
calculation of basis. The Treasury Obligations held by the Trust are
treated as stripped bonds and are treated as bonds issued at an original
issue discount as of the date a Unit holder purchases his Units. Because
the Treasury Obligations represent interests in "stripped" U.S. Treasury
bonds, a Unit holder's initial cost for his pro rata portion of each
Treasury Obligation held by the Trust (determined at the time he
acquires his Units in the manner described above) shall be treated as
its "purchase price" by the Unit holder. Original issue discount is
effectively treated as interest for Federal income tax purposes and the
amount of original issue discount in this case is generally the
difference between the bond's purchase price and its stated redemption
price at maturity. A Unit holder will be required to include in gross
income for each taxable year the sum of his daily portions of original
issue discount attributable to the Treasury Obligations held by the
Trust as such original issue discount accrues and will in general be
subject to Federal income tax with respect to the total amount of such
original issue discount that accrues for such year even though the
income is not distributed to the Unit holders during such year to the
extent it is not less than a "de minimis" amount as determined under
Treasury Regulations relating to stripped bonds. To the extent the
amount of such discount is less than the respective "de minimis" amount,
such discount is generally treated as zero. In general, original issue
discount accrues daily under a constant interest rate method which takes
into account the semi-annual compounding of accrued interest. In the
case of the Treasury Obligations, this method will generally result in
an increasing amount of income to the Unit holders each year. Unit
holders should consult their tax advisors regarding the Federal income
tax consequences and accretion of original issue discount. For Federal
income tax purposes, a Unit holder's pro rata portion of dividends
(other than designated capital gain dividends as discussed below) as
defined by Section 316 of the Code, paid with respect to a Northstar
Growth share held by the Trust is taxable as ordinary income to the
extent of Northstar Growth's current and accumulated "earnings and
profits." A Unit holder's pro rata portion of dividends paid on such
Northstar Growth share which exceed such current and accumulated
earnings and profits will first reduce a Unit holder's tax basis in such
Northstar Growth share, and to the extent that such dividends exceed a
Unit holder's tax basis in such Northstar Growth share shall generally
be treated as capital gain. In general, any such capital gain will be
short-term unless a Unit holder has held his or her Units for more than
one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust
will generally be considered a capital gain except in the case of a
dealer or a financial institution and, in general, will be long-term if
the Unit holder has held his Units for more than one year (the date on
which the Units are acquired (i.e., the "trade date") is excluded for
purposes of determining whether the Units have been held for more than
one year). A Unit holder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust
will generally be considered a capital loss (except in the case of a
dealer or a financial institution) and, in general, will be long-term if
the Unit holder has held his Units for more than one year. Unit holders
should consult their tax advisors regarding the recognition of such
capital gains and losses for Federal income tax purposes.
Dividends Received Deduction. Distributions on the Northstar Growth
shares which are taxable as ordinary income to the Unit holders will
constitute dividends for Federal income tax purposes. To the extent
dividends received by Northstar Growth are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to the pro rata portion of
such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
However, to the extent dividends received by Northstar Growth are from
United States corporations (other than real estate investment trusts)
and are designated by Northstar Growth as being eligible for the
dividends received deduction, distributions received by corporate Unit
holders (other than corporate Unit holders, such as "S" corporations,
which are not eligible for the deduction because of their special
Page 5
characteristics and other than for purposes of special taxes such as
accumulated earnings tax and personal holding corporation tax) with
respect to Northstar Growth shares attributable to such dividends may
qualify for the 70% dividends received deduction, subject to limitations
otherwise applicable to the availability of the deduction. It should be
noted that various legislative proposals that would affect the dividends
received deduction have been introduced. Unit holders should consult
with their tax advisors with respect to the limitations on and possible
modifications to the dividends received deductions.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. Because Unit holders are deemed to
directly own a pro rata portion of the Northstar Growth shares as
discussed above, Unit holders are advised to read the discussion of tax
consequences set forth in the current prospectus for Northstar Growth.
Distributions declared by Northstar Growth on the Northstar Growth
shares in October, November or December that are held by the Trust and
paid during the following January will be treated as having been
received by Unit holders on December 31 in the year such distributions
were declared. Distributions of the Northstar Growth's net capital gain
which Northstar Growth properly designates as capital gain dividends
will be taxable to the Unit holders as long-term capital gains
regardless of how long a person has been a Unit holder. If a Unit holder
holds his Units for six months or less or if the Trust holds shares of
Northstar Growth for six months or less, any loss incurred by a Unit
holder related to the disposition of Northstar Growth shares will be
treated as a long-term capital loss to the extent of any long-term
capital gains distributions received (or deemed to have been received)
with respect to such shares. For taxpayers other than corporations, net
capital gains are subject to a maximum marginal stated tax rate of 28%.
On July 29, 1997, White House officials and Congressional leaders
announced an agreement on a budget bill (the "Bill"). The Bill, if
adopted, would reduce the maximum stated marginal tax rate for capital
gains for investments held for at least 18 months to 20% (10% in the
case of certain taxpayers in the lowest tax bracket). The announcement
did not include specific legislative language. Potential investors
should consult their tax advisors regarding the potential effect of the
Bill on their investment in Units. However, it should be noted that
legislative proposals are introduced from time to time that affect tax
rates and could affect relative differences at which ordinary income and
capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act includes a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units. If the Unit holder disposes of a
Unit, he is deemed thereby to have disposed of his entire pro rata
interest in all assets of the Trust including his pro rata portion of
all the Securities represented by that Unit.
Legislative proposals have been made that would treat certain
transactions designed to reduce or eliminate risk of loss and
opportunities for gain as constructive sales for purposes of recognition
of gain (but not loss). Unit holders should consult their own tax
advisors with regard to any such constructive sales rules.
Limitations on Deductibility of Trust Expenses by Unit Holders. Each
Unit holder's pro rata share of each expense paid by the Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him. It should be noted that as a result of
the Tax Reform Act of 1986, certain miscellaneous itemized deductions,
such as investment expenses, tax return preparation fees and employee
business expenses will be deductible by an individual only to the extent
they exceed 2% of such individual's adjusted gross income. Unit holders
may be required to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation. Northstar
Growth may elect to pass through to its shareholders the foreign income
and similar taxes paid by Northstar Growth in order to enable such
shareholders to take a credit (or deduction) for foreign income taxes
paid by Northstar Growth. If such an election is made, Unit holders of
the Trust, because they are deemed to own a pro rata portion of the
Northstar Growth shares held by the Trust, as described above, must
include in their gross income, for Federal income tax purposes, both
their portion of dividends received by the Trust from Northstar Growth,
and also their portion of the amount which Northstar Growth deems to be
Page 6
the Trust's portion of foreign income taxes paid with respect to, or
withheld from, dividends, interest or other income of Northstar Growth
from its foreign investments. Unit holders may then subtract from their
Federal income tax the amount of such taxes withheld, or else treat such
foreign taxes as deductions from gross income; however, as in the case
of investors receiving income directly from foreign sources, the above
described tax credit or deduction is subject to certain limitations.
Legislative proposals have been made which would impose a required
holding period (with respect to the Unit holder's holding of Units in
the Trust, the Trust's holding of shares in Northstar Growth and
Northstar Growth's holding of foreign securities) for such credit. Unit
holders should consult their tax advisors regarding this election and
its consequences to them.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified that payments to the Unit holder are
subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by the Trust to such Unit holder (including amounts
received upon the redemption of Units) will be subject to back-up
withholding. Distributions by a Trust will generally be subject to
United States income taxation and withholding in the case of Units held
by non-resident alien individuals, foreign corporations or other non-
United States persons (accrual of original issue discount on the
Treasury Obligations may not be subject to taxation or withholding
provided certain requirements are met). Such persons should consult
their tax advisers.
Unit holders will be notified annually of the amounts of original issue
discount, dividend income and long-term capital gains distributions
includable in the Unit holder's gross income and amounts of Trust
expenses which may be claimed as itemized deductions.
Dividend income, long-term capital gains and accrual of original issue
discount may also be subject to state and local taxes. Foreign investors
may be subject to different Federal income tax consequences than those
described above. Investors should consult their tax advisors for
specific information on the tax consequences of particular types of
distributions.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Why are Investments in the Trust Suitable for
Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trust for New York tax matters, under the existing income tax laws of
the State of New York the Trust is not an association taxable as a
corporation and the income of the Trust will be treated as the income of
the Unit holders thereof.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
and income received in each of the foregoing plans is deferred until
distributions are received. Distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for
special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are Zero Coupon Treasuries?
The Treasury Obligations deposited in the Trust consist of U.S. Treasury
bonds which have been stripped of their unmatured interest coupons. The
Treasury Obligations evidence the right to receive a fixed payment at a
future date from the U.S. Government, and are backed by the full faith
and credit of the U.S. Government. Treasury Obligations are purchased at
a deep discount because the buyer obtains only the right to a fixed
payment at a fixed date in the future and does not receive any periodic
interest payments. The effect of owning deep discount bonds which do not
make current interest payments (such as the Treasury Obligations) is
that a fixed yield is earned not only on the original investment but
also, in effect, on all earnings during the life of the discount
obligation. This implicit reinvestment of earnings at the same rate
Page 7
eliminates the risk of being unable to reinvest the income on such
obligations at a rate as high as the implicit yield on the discount
obligation, but at the same time eliminates the holder's ability to
reinvest at higher rates in the future. For this reason, the Treasury
Obligations are subject to substantially greater price fluctuations
during periods of changing interest rates than are securities of
comparable quality which make regular interest payments. The effect of
being able to acquire the Treasury Obligations at a lower price is to
permit more of the Trust's portfolio to be invested in shares of
Northstar Growth.
What is The Northstar Growth Fund?
The portfolio of the Trust also contains shares of Northstar Growth.
Northstar Growth was formerly referred to as Advantage Growth. Northstar
Growth is an open-end diversified management investment company,
commonly known as a mutual fund. Northstar Growth is registered under
the Investment Company Act of 1940 as an open-end, diversified
management investment company. Northstar Growth's investment objective
is long-term growth of capital. The shares of Northstar Growth deposited
in the Trust are maintained on the books of Northstar Growth's transfer
agent.
Northstar Growth currently offers three classes of shares ("Class A,"
"Class B" and "Class C") which may be purchased at a price equal to
their respective net asset value per share, plus a sales charge. The
Trust has purchased Class T shares, which as of June 5, 1995 are no
longer offered for sale by any Northstar Fund, except in connection with
reinvestment of dividends and other distributions, upon exchange of
Class T shares of another Northstar Fund or upon exchange from the Class
T Account of the Money Market Portfolio. Any reference to Northstar
Growth shares in this Prospectus shall refer to Class T shares.
Northstar Growth has followed the practice of paying a distribution at
least once annually representing substantially all of its net investment
income and distributing any net realized capital gains.
The table below shows important financial information for Northstar
Growth, such as net investment income, expenses, and dividends,
expressed in terms of one share outstanding throughout the period. This
table is covered by the independent public accountant's report appearing
in Northstar Growth's Statement of Additional Information dated March 1,
1997. Northstar Growth's Statement of Additional Information dated March
1, 1997 and its prospectus dated March 1, 1997 may be obtained without
charge by writing to The Northstar Funds, Two Pickwick Plaza, Greenwich,
Connecticut 06830 or calling (203) 863-6200 or 1-800-595-7827.
Page 8
Selected per Share Data and Ratios for a
Northstar Growth Share Outstanding throughout the Period
Northstar Growth Fund
<TABLE>
<CAPTION>
Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
________ ________ ________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period $15.53 $15.75 $17.33 $16.36 $16.37 $12.49 $13.85 $11.96
_______ _______ _______ _______ _______ _______ _______ _______
Income from investment
operations:
Net investment income (loss) (0.06) 0.07 0.08 0.02 0.02 0.09 0.10 0.20
Net realized and unrealized
gain (loss) 3.16 3.77 (1.41) 1.67 1.30 4.62 (0.83) 2.66
_______ _______ _______ _______ _______ _______ _______ _______
Total from investment
operations 3.10 3.84 (1.33) 1.69 1.32 4.71 (0.73) 2.86
_______ _______ _______ _______ _______ _______ _______ _______
Less distributions:
Dividends from net
investment income - (0.07) (0.08) (0.04) (0.02) (0.08) (0.10) (0.20)
Dividends from net realized gain (0.81) (3.99) (0.15) (0.67) (1.31) (0.75) (0.51) (0.76)
Dividends from capital - - (0.02) (0.01)* 0.00 0.00 (0.02) (0.01)
_______ _______ _______ _______ _______ _______ _______ _______
Total distributions (0.81) (4.06) (0.25) (0.72) (1.33) (0.83) (0.63) (0.97)
_______ _______ _______ _______ _______ _______ _______ _______
Net asset value at end of period $17.82 $15.53 $15.75 $17.33 $16.36 $16.37 $12.49 $13.85
_______ _______ _______ _______ _______ _______ _______ _______
Total return+ 19.90% 24.40% (7.66)% 10.36% 8.05% 38.10% (5.24)% 24.25%
Ratios/supplemental data:
Net assets at end of period
(thousands) $70,406 $76,343 $76,391 $80,759 $56,759 $40,884 $24,927 $29,842
Ratio of operating expenses
to average net assets 2.00% 2.00% 2.00% 2.04% 2.15% 2.25% 2.33% 2.33%
Ratio of expense reimbursement
to average net assets 0.04% - - - - - - -
Ratio of net investment income
(loss) to average net assets (3.05)% 0.37% 0.49% 0.13% 0.09% 0.66% 0.80% 1.39%
Average commissions per share $0.0593 - - - - - - -
Portfolio turnover rate 62.00% 134.00% 53.76% 42.27% 46.77% 63.56% 54.22% 74.56%
</TABLE>
______________
* Represents distribution in excess of investment income due to
differences in book and tax income. The following expense table lists
the costs and expenses that an investor will incur either directly or
indirectly as a shareholder of Northstar Growth, based upon Northstar
Growth's operating expenses for its most recent fiscal year.
+ Assumes dividends have been reinvested and does not reflect the
effect of sales charges. Unaudited prior to 1992.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
<S> <C>
Maximum Front-End Sales Load Imposed on Purchases of Shares
(as a percentage of Offering Price) 0%
Maximum Front-End or Deferred Sales Load on Reinvested Dividends/Distributions 0%
Maximum Contingent Deferred Sales Load on Sale of Shares
(as a percentage of the lesser of original price or redemption proceeds) 4% *
Exchange Fee $0
Annual Northstar Growth Operating Expenses
(as a percentage of average net assets)
Management Fee .75%
12b-1 Fee .95% **
Other Expenses .30%
Total Fund Operating Expenses 2.00%
</TABLE>
______________
* Contingent deferred sales load on redemptions declines 1% annually
from a maximum of 4% to 0% after four years.
** Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charge permitted by the National Association
of Securities Dealers, Inc. ("NASD") rules regarding investment companies.
Page 9
<TABLE>
<CAPTION>
Example
1 year 3 years 5 years 10 years
_______ _______ _______ ________
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming 5% annual return and
redemption at the end of each time period
Northstar Growth* ** $60 $83 $108 $220
You would pay the following expenses on the same
investment, assuming no redemption
Northstar Growth* ** $20 $63 $108 $220
</TABLE>
_______________
* There is no contingent deferred sales load payable upon the
redemption of the Northstar Growth shares deposited in the Trust.
However, the maximum sales charge on the Units, and therefore indirectly
on the Northstar Growth shares is 5.0% in the secondary market.
** Effectively, there are no 12b-1 fees on Northstar Growth shares held
in the Trust. However, Unit holders who acquire shares of Northstar
Growth through reinvestment of dividends or distributions or through
reinvestment at the Trust's termination will begin to incur 12b-1 fees
at such time as shares are acquired.
The foregoing table is intended to assist investors in understanding the
various costs and expenses that they will bear directly or indirectly
when investing in Northstar Growth. The example is included to provide a
means for comparison of expense levels of mutual funds with different
fee structures over varying investment periods. To facilitate this
comparison, all mutual funds are required for this purpose to assume a
5% annual return. This assumption is unrelated to Northstar Growth's
past performance and is not a projection of future performance. In
addition, the example should not be considered a representation of past
or future expenses of Northstar Growth. The Northstar Growth's actual
expenses may be greater or less than those shown. The first part of the
example reflects deduction of the contingent deferred sales load imposed
by Northstar Growth at rates declining 1% annually from a maximum of 4%
of the lesser of the new asset value or total cost of shares redeemed
within one year of purchase to 1% of such amount for shares redeemed
after three years. No contingent deferred sales load is deducted with
respect to shares redeemed after four years or acquired through
reinvestment of distributions.
Northstar Growth was established as an unincorporated business trust
under the laws of The Commonwealth of Massachusetts in October 1985. The
Trustees of Northstar Growth have authority to issue an unlimited number
of shares of beneficial interest without par value. When issued, each
share will be fully paid and nonassessable by Northstar Growth.
Shareholders do not have preemptive or conversion rights. All shares
have equal rights with regard to voting, redemption, dividends,
distributions and liquidation. Each share of Northstar Growth is
entitled to one vote. Shares of Northstar Growth do not have cumulative
voting rights. Fractional shares have proportional voting rights and
participate in any distributions and dividends.
Certificates for shares of Northstar Growth will be issued only upon
specific written request to Northstar Growth. Northstar Growth's
transfer agent maintains records of each shareholder's account and
confirmations showing purchase and sale transactions are issued.
Northstar Growth is not required to hold annual meetings of
shareholders. However, special meetings of shareholders may be called
for purposes such as electing or removing Trustees, changing a
fundamental investment policy, and approving an investment advisory
agreement or a Rule 12b-1 distribution plan. In addition, a special
meeting of shareholders of Northstar Growth will be held if, at any
time, less than a majority of the Trustees then in office have been
elected by shareholders of Northstar Growth. Shareholders of Northstar
Growth have the right to communicate with other shareholders of
Northstar Growth in accordance with the provisions of Section 16(c) of
the Investment Company Act of 1940.
From time to time Northstar Growth may advertise the "total return" or
"yield" of its portfolio and may compare its performance with that of
other mutual funds as listed in the rankings prepared by Lipper
Analytical Services, Inc., or similar independent services monitoring
mutual fund performance, and with appropriate securities indices. The
"total return" of Northstar Growth refers to the average annual
compounded rate of return over the stated period that would equate an
initial investment in Northstar Growth at the beginning of the period to
its ending redeemable value, assuming reinvestment of all dividends and
distributions and deduction of all recurring charges and any contingent
Page 10
deferred sales charge. Northstar Growth's "yield" is computed by
dividing the net investment income per share earned during the most
recent calendar month by the maximum offering price per share on the
last day of such month. In computing net investment income, all
recurring charges are recognized. The methods used to calculate "total
return" and "yield" are described further in the Statement of Additional
Information.
The performance of Northstar Growth will vary from time to time in
response to fluctuations in market conditions, interest rates, the
composition of Northstar Growth's portfolio and expenses. Consequently,
Northstar Growth's performance figures should not be considered
representative of the performance of Northstar Growth for any future
period. Current performance information for Northstar Growth may be
obtained by contacting your investment broker.
What are Northstar Growth's Investment Objectives and Policies?
Northstar Growth's investment objective is long-term growth of capital.
The investment objective of Northstar Growth may be changed by Northstar
Growth's Trustees without shareholder approval. There can, of course, be
no guarantee that the investment objectives of Northstar Growth will be
achieved, due to the uncertainty inherent in all investments. Northstar
Growth invests principally in common stocks of companies which are
listed on the domestic securities exchanges or are traded in the over-
the-counter domestic markets, but may, to a limited extent, invest in
securities traded in markets outside the United States. Northstar Growth
may also invest in preferred stocks and convertible securities issued by
such companies.
Northstar Growth invests in industries and companies which, in the
opinion of Northstar Growth's investment adviser, have potential
primarily for capital growth and secondarily for income. The investment
adviser generally selects securities of companies with records of above-
average earnings growth or companies which, in its view, are
substantially undervalued in relation to assets. Some of the equity
securities in which Northstar Growth invests may be speculative and
involve substantial risk since they may experience significant price
fluctuations in both rising and declining markets. Northstar Growth may
invest up to 20% of its net assets in securities of foreign issuers, not
more than 10% of which may be invested in issuers that are not listed on
a U.S. securities exchange.
Other Investment Policies and Techniques. In addition to investing in
securities directly, Northstar Growth may employ other investment
techniques which, together with their related risks, are summarized
below. These investment techniques and the related risks are described
in more detail in the Statement of Additional Information for Northstar
Growth.
Derivative Securities. Northstar Growth may purchase derivative
securities, securities that derive their value from the performance of
an underlying asset. Derivatives 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 future and forward contracts. Derivative are often
used to "hedge" or offset market fluctuations or changes in currency
exchange or interest rates, but may also be used for speculative
purposes to increase returns. 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 or its underlying asset; hedging may not
be successful, and may prevent Northstar Growth from making other gains;
and derivatives used for speculative purposes can result in gains or
losses that are substantially greater than the derivative's original
cost.
Options and Futures Transactions and their Risks. Northstar Growth's
investment adviser may at times seek to hedge against either a decline
in the value of securities included in its portfolio or an increase in
the price of securities which it plans to purchase for Northstar Growth
through the writing and purchase of options and the purchase and sale of
financial futures contracts and related options, including options and
futures on stock indices. In addition, Northstar Growth may seek to
increase the current return of its portfolio by writing covered call or
secured put options.
Northstar Growth generally expects that its options and futures
transactions will be conducted on securities exchanges. In certain
instances, however, Northstar Growth may purchase and sell options in
the over-the-counter market. The staff of the Securities and Exchange
Commission (the "Commission") considers over-the-counter options and
their underlying securities to be illiquid and accordingly no more than
15% of Northstar Growth's net assets may be subject to such options or
will be invested in other illiquid securities at any time. Northstar
Page 11
Growth's ability to terminate option positions established in the over-
the-counter market may be more limited than in the case of exchange-
traded options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their obligations
to Northstar Growth.
In the case of certain options and futures transactions, Northstar
Growth may be required to maintain in a segregated account at its
custodian bank, cash or short-term U.S. Government Securities with a
value equal to or greater than Northstar Growth's obligation under the
option or futures contract.
The use of options and futures strategies by Northstar Growth involves
certain risks, including the risk that no liquid market will exist and
that Northstar Growth will be unable to effect closing transactions at
any particular time or at an acceptable price and the risk of imperfect
correlation between movements in options and futures prices and
movements in the price of the securities which are the subject of the
hedge. The successful use of options and futures strategies depends on
the ability of Northstar Growth's investment adviser to correctly
forecast rate movements and general stock market price movements.
Expenses and losses incurred as a result of these hedging strategies
will reduce the current return.
Repurchase Agreements. Northstar Growth may invest in repurchase
agreements either for temporary defensive purposes due to adverse market
conditions or to generate income from its cash balances. Repurchase
agreements maturing more than seven days in the future are considered
illiquid, and Northstar Growth will invest no more than 15% of its net
assets in such repurchase agreements at any time. Repurchase agreements
acquired by Northstar Growth will always be fully collateralized by
money market instruments (generally securities issued by the U.S.
Government, bankers' acceptances, or certificates of deposit) as to
principal and interest and will be entered into only with commercial
banks, brokers and dealers considered by Northstar Growth's investment
adviser to be creditworthy under guidelines adopted by the Trustees of
Northstar Growth. The use of repurchase agreements involves certain
risks such as default by, or insolvency of, the other party to the
repurchase agreement. Northstar Growth's right to liquidate its
collateral in the event of a default could involve certain costs, losses
or delays and, to the extent that proceeds from any sale upon default of
the obligation to repurchase are less than the repurchase price,
Northstar Growth could suffer a loss.
Lending Portfolio Securities. In order to obtain a return on its
investments, Northstar Growth may lend portfolio securities to brokers,
dealers and other financial institutions in amounts up to one-third of
the value of its total assets. Loans of portfolio securities will always
be fully collateralized and will be made only to borrowers considered by
Northstar Growth's investment adviser to be creditworthy under
guidelines adopted by the Trustees of Northstar Growth. Northstar Growth
may invest cash collateral in high-yielding, short-term investments,
including any combination of U.S. Government Securities, bank letters of
credit, repurchase agreements or investment grade commercial paper,
rated in the top two ranking categories by a nationally recognized
statistical rating organization. Lending portfolio securities involves
risk of delay in the recovery of the loaned securities and in some cases
the loss of rights in the collateral should the borrower fail financially.
Forward Commitments. Northstar Growth may make contracts to purchase
securities for a fixed price at a future date beyond customary
settlement time ("forward commitments") if it holds, and maintains until
the settlement date in a segregated account at its custodian bank, cash
or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if it enters into offsetting contracts for the
forward sale of other securities it owns. Forward commitments may be
considered securities in themselves, and involve risk of loss if the
value of the security to be purchased declines prior to the settlement
date, which risk is in addition to the risk of decline in value of
Northstar Growth's other assets. Where such purchases are made through
dealers, Northstar Growth relies on the dealer to consummate the sale.
The dealer's failure to do so may result in the loss to Northstar Growth
of an advantageous yield or price.
Floating or Variable Rate Instruments. Northstar Growth may invest in
floating or variable rate instruments, which provide for interest rate
adjustment at specified intervals. Rate adjustments on such securities
are usually set at the issuer's discretion, in which case the Fund would
normally have the right to resell the security to the issuer or its
agent. Alternatively, rate revisions may be determined in accordance
with a prescribed formula or other contractual procedure. A Fund may
also acquire put options in combination with the purchase of underlying
Page 12
securities or may separately acquire put options that relate to
securities held in the portfolio. Such put options would give Northstar
Growth the right to require the issuer or some other person to purchase
the underlying security at an agreed upon price.
Discount Obligations. A portion of Northstar Growth's investments in
debt securities may be in (i) securities which were originally issued at
a discount from their face value (collectively, "Discount Obligations")
and (ii) securities purchased by Northstar Growth at a price less than
their stated face value amount. Under current federal tax law, Northstar
Growth will accrue as current income each year a portion of the discount
even though Northstar Growth does not receive during the year cash
interest payments on the obligation corresponding to the accrued
discount. As an investment company, Northstar Growth must pay out
substantially all of its net investment income each year. Accordingly,
Northstar Growth may be required to pay out as income distribution each
year an amount which is greater than the total amount of cash interest
Northstar Growth actually received. Such distributions will be made from
the cash assets of Northstar Growth or by liquidation of its portfolio
securities, if necessary.
Defensive Strategies. When adverse market conditions warrant a temporary
defensive strategy, Northstar Growth may invest in U.S. Government
Securities and money market instruments. Money market instruments
include high-grade commercial paper (promissory notes issued by
corporations to finance their short-term credit needs), negotiable
certificates of deposit, non-negotiable fixed time deposits with
maturities of less than seven days, bankers' acceptances and repurchase
agreements. Investment in commercial paper will be rated Prime-1 or
Prime-2 by Moody's, A-1 or A-2 by Standard & Poor's, or F-1 or F-2 by
Fitch Investors Service, Inc. Investment in bank instruments will be in
instruments which are issued by U.S. banks having assets at the time of
investment of $1 billion or more and which generally mature in one year
or less from the date of the acquisition.
Foreign Investments. Northstar Growth may invest up to 20% of its net
assets in securities of foreign issuers. Up to 10% of the Fund's net
assets may be invested in securities of foreign issuers that are not
listed on a U.S. securities exchange. Such securities include securities
that are traded on a stock exchange or on an established over-the-
counter market outside the United States and privately placed securities
that are resold to U.S. institutional buyers.
Investments in foreign securities involve certain risks, such as
possible imposition of additional dividend or interest withholding or
confiscatory taxes, possible currency blockages or transfer
restrictions, expropriation, nationalization or other adverse political
or economic developments and the difficulty of enforcing obligations in
other countries. Investments in foreign securities that are not traded
on a U.S. securities exchange or in the U.S. over-the-counter market
involve additional considerations due to more limited information,
higher brokerage costs, different accounting standards and thinner
trading markets. Where the purchase is made in a foreign currency,
Northstar Growth may incur currency conversion costs and may be
adversely affected by fluctuations in the value of that currency.
Zero Coupon Treasury Securities. Northstar Growth may invest up to 5% of
its total assets in zero coupon Treasury securities, which consist of
stripped interest or principal components of U.S. Treasury bonds or
notes ("STRIPs"). STRIPs involve the separation of the corpus (face
amount) of the bond or note from the coupon (interest portion). The U.S.
Treasury redeems the bond or note corpus (zero coupon bond or note) for
the face value thereof at maturity and redeems the stripped coupon
(interest portion) beginning at the date specified thereon. Such
securities pay no interest to holders during their life and usually
trade at a deep discount from their face or par value. They are subject
to greater fluctuations of market value in response to changing interest
rates than debt obligations of comparable maturities which make periodic
distributions of interest. On the other hand, zero coupon securities
eliminate reinvestment risk and lock in a rate of return to maturity.
Stripped interests in U.S. Treasury Securities that are not issued
through the U.S. Treasury's STRIPS program are not considered to be U.S.
Government Securities.
Under current federal tax law, Northstar Growth will receive net
investment income in the form of interest by virtue of holding Treasury
bills, notes and bonds, and will recognize interest attributable to it
from holding zero coupon Treasury securities. Current federal tax law
requires that a holder of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year even
though Northstar Growth receives no interest payment in cash on the
security during the year. As an investment company, Northstar Growth
must pay out substantially all of its net investment income each year.
Accordingly, Northstar Growth may be required to pay out as an income
Page 13
distribution each year an amount which is greater than the total amount
of cash interest Northstar Growth actually received. Such distributions
will be made from the cash assets of Northstar Growth or by liquidation
of portfolio securities, if necessary.
Private Placements. Northstar Growth may acquire privately placed
securities that are not registered under the Securities Act of 1933, but
that can be offered and sold to qualified institutional buyers under
Rule 144A under the Act ("144A securities"). The Board of Trustees has
adopted guidelines that delegate to Northstar Growth's investment
adviser the daily function of determining and monitoring the liquidity
of 144A securities. Since it is not possible to predict with assurance
exactly how the institutional market for 144A securities will develop,
the Trustees will carefully monitor Northstar Growth investments in
these securities, focusing upon various factors, including valuation,
liquidity and availability of information. Because institutional trading
in restricted securities is relatively new, it is not possible to
predict how institutional markets will develop. If institutional trading
in restricted securities were to decline to limited levels, the
liquidity of the investments in Rule 144A securities could be adversely
effected.
Investment Restrictions. Northstar Growth has adopted certain
fundamental investment policies which may not be changed without
approval of Northstar Growth shareholders. These policies provide, among
other things, that Northstar Growth may not: (i) borrow money, except
from a bank and as a temporary measure for extraordinary or emergency
purposes, provided Northstar Growth maintains asset coverage of 300% for
all borrowings; (ii) purchase securities of any one issuer (except
Government securities) if, as a result, more than 5% of the total assets
would be invested in that issuer or Northstar Growth would own or hold
more than 10% of the outstanding voting securities of the issuer,
provided, however, that up to 25% of total assets may be invested
without regard to these limitations; (iii) underwrite the securities of
other issuers, except to the extent that in connection with the
disposition of portfolio securities, Northstar Growth may be deemed to
be an underwriter; (iv) concentrate its assets in the securities of
issuers all of which conduct their principal business activities in the
same industry (this restriction does not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities);
(v) make any investment in real estate, commodities or commodities
contracts, except that Northstar Growth may: (a) purchase or sell
readily marketable securities which are secured by interests in real
estate or issued by companies which 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 Northstar Growth's Statement of Additional Information; (vi) make
loans, except that Northstar Growth may (a) invest in repurchase
agreements, and (b) loan its portfolio securities in amounts up to one-
third of the market or other fair value of its total assets; and (vii)
issue senior securities, except as appropriate to evidence indebtedness
which it is permitted to incur, provided that the deposit or payment by
Northstar Growth of initial or maintenance margin in connection with
futures contracts and related options is not considered the issuance of
senior securities; (viii) borrow money in excess of 5% of its total
assets (taken at market value); (ix) pledge, mortgage, or hypothecate in
excess of 5% of its total assets (the deposit or payment by Northstar
Growth of initial or maintenance margin in connection with futures
contracts and related options is not considered a pledge or
hypothecation of assets); (x) purchase more that 10% of the voting
securities of any one issuer, except U.S. Government Securities; (xi)
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 Northstar Growth has valued the securities,
excluding restricted securities that have been determined by the
Trustees of Northstar Growth (or the persons designated by them to make
such determinations) to be readily marketable; (xii) 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 Northstar Growth in all such issuers to exceed 5% of the
total assets of Northstar Growth taken at market value. For information
on certain nonfundamental policies which may be changed at any time
without a shareholder vote, see "Investment Restrictions" in Northstar
Growth's Statement of Additional Information.
The net asset value per share of Northstar Growth is computed each day
on which the New York Stock Exchange is open as of the close of trading
on the exchange (currently 4:00 p.m. Eastern time). The net asset value
per share is arrived at by determining the value of all of the assets of
Northstar Growth, subtracting all liabilities and dividing the result by
Page 14
the total number of shares outstanding. Short-term obligations with
maturities of 60 days or less may be valued at amortized cost, provided
that it approximates market value. All other investments are valued at
market value or, where market quotations are not readily available, at
fair value as determined by or under the direction of the Trustees of
Northstar Growth. Since market quotations for many high yield debt
instruments may be determined by pricing services approved under the
direction of the Trustees of Northstar Growth, as the case may be.
Additional information concerning Northstar Growths' valuation policies
is contained in the Statement of Additional Information.
Who is the Investment Adviser of Northstar Growth?
Northstar Investment Management Corporation (the "Adviser"), Two
Pickwick Plaza, Greenwich, Connecticut 06830, serves as investment
adviser to Northstar Growth. The Adviser is an indirect, majority-owned
subsidiary of ReliaStar Financial Corp. ("ReliaStar"). Combined minority
interests held by members of senior management currently equal 20%.
ReliaStar is a publicly traded holding company whose subsidiaries
specialize in the life and health insurance businesses. Through
Northwestern National Life Insurance Company and other subsidiaries,
ReliaStar issues and distributes individual life insurance, annuities
and mutual funds, group life and health insurance and life and health
reinsurance, and provides related investment management services. Prior
to June 2, 1995, the Fund was managed by Boston Security Counsellors,
Inc. ("BSC"). BSC is a wholly-owned subsidiary of The Advest Group,
Inc., which is also the parent company of Advest, Inc.
Subject to the supervision and direction of the Trustees of Northstar
Growth, the Adviser manages Northstar Growth's portfolio in accordance
with its stated investment objective and policies, makes investment
decisions for Northstar Growth, places orders to purchase and sell
securities on behalf of Northstar Growth, and administers the affairs of
Northstar Growth. For its services, Northstar Growth pays the Adviser a
fee monthly at the annual rate of .75% of Northstar Growth's average
daily net assets. This fee is higher than investment advisory fees paid
by many other mutual funds.
Expenses. Northstar Growth bears all expenses of its operations other
than those incurred by the Adviser under its investment advisory
agreement. Northstar Growth pays the following expenses, among others:
investment advisory fees; amounts pursuant to their distribution plans;
bookkeeping, share pricing and shareholder servicing fees and expenses;
custodian fees and expenses; legal and auditing fees; expenses of
prospectuses, statements of additional information and shareholder
reports for distribution to current shareholders; registration and
reporting fees and expenses; and Trustees' fees and expenses. Under the
investment advisory agreement, the Adviser will reduce its fee to the
extent that expenses payable by Northstar Growth would exceed the limit
on expenses applicable to the Fund in any state in which the Fund's
shares are then qualified for sale. For the fiscal year ended December
31, 1994, total operating expenses borne by Northstar Growth (as a
percentage of the Fund's average net assets) were 2.00%.
Portfolio Brokerage Transactions. Subject to the supervision of the
Trustees, the Adviser selects the brokers and dealers which execute
orders to purchase and sell portfolio securities for Northstar Growth.
The Adviser seeks to obtain the best available price and most favorable
execution with respect to all transactions for Northstar Growth.
In selecting broker/dealers and negotiating commissions, the Adviser
considers the firm's reliability, the quality of its execution services
on a continuing basis and its financial condition. When more than one
firm are believed to meet these criteria, preference may be given to
brokers who provide research or statistical materials or other services
to Northstar Growth. The Adviser is authorized to pay higher commissions
to brokerage firms that provide the Adviser with such materials than to
firms which do not provide such services if the Adviser determines that
such commissions are reasonable in relation to the overall services
provided. The information received may be used by the Adviser in
managing the assets of other advisory accounts managed by the Adviser as
well as in the management of Northstar Growth.
Subject to the consideration of best price and execution and to
applicable regulations, sales of shares of other members of The
Northstar Funds may be considered as a factor in the selection of
brokers and dealers which execute orders to purchase and sell portfolio
securities for Northstar Growth.
Distribution Plans. Northstar Growth has adopted a distribution plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Page 15
distribution plans authorize the periodic expenditure by Northstar
Growth of .95% annually of its average daily net asset value for each
year elapsed subsequent to adoption of the plan to finance activities
which are primarily intended to result in the sale of shares of
Northstar Growth Fund, including but not limited to, the following: (i)
commissions to sales personnel for selling shares of Northstar Growth;
(ii) compensation, sales incentives and payments to sales, marketing and
service personnel; (iii) payments to broker/dealers and other financial
institutions which have entered into agreements with NWNL Northstar
Distributors, Inc. (the "Underwriter") in the form of the Dealer
Agreement for Northstar Growth for services rendered in connection with
the sale and distribution of shares of Northstar Growth and provision of
shareholder services; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to
Northstar Growth, (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing Northstar Growth's
Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the
Trustees of Northstar Growth determine are reasonably calculated to
result in the sale of shares of Northstar Growth; provided, however,
that a portion of such amount paid to the Underwriter may be paid for
reimbursing the costs of providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts
(the "Service Fee"). From the Service Fee, the Underwriter expects to
pay a quarterly fee to qualifying broker/dealers firms, as compensation
for providing personal services to shareholders and/or for the
maintenance of shareholder accounts with respect to shares sold by such
firms. In order to receive Service Fees under the Plans, participants
must meet such qualifications to be established in the sole discretion
of the Underwriter. This fee will not exceed on an annual basis 0.25% of
the average annual net asset value of such shares, and will be in
addition to sales charges on Northstar Growth shares which are paid or
reallowed to such firms. To the extent that the entire amount of such
Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished to
shareholders by the Underwriter. With respect to the Class T Plan, it is
anticipated that all of the payments received by the Underwriter under
the Plan will be paid to Advest, Inc. as compensation for servicing
Class T shareholder accounts and reimbursement for its prior
distribution and shareholder servicing activities in connection with
Class T shares.
The amount paid to the Underwriter in any year pursuant to the
distribution plan may exceed the amount of expenses incurred by it in
performing distribution services on behalf of Northstar Growth, thereby
resulting in a profit to the Underwriter or Advest, Inc. for that year.
It is more likely, however, that during periods in which significant new
sales of Northstar Growth shares are occurring, the amount of expenses
incurred by the Underwriter or Advest, Inc. in any year will exceed the
annual rate permitted under the plan. Pursuant to the distribution plan,
total payments made by Northstar Growth in any year may not exceed .95%
of such Fund's average daily net assets. Under NASD rules, fees of this
type will be limited to .75% annually for sales charges and .25%
annually for service fees, with an aggregate limit upon sales charges of
6.25% of new gross sales after inception of a 12b-1 plan plus interest
on outstanding balances at the prime rate plus 1% per annum. Payments by
Northstar Growth have been set at .95% annually. Payments received by
the Underwriter under the distribution plans during 1994 were utilized
by the Underwriter or Advest, Inc. to defray commissions paid to sales
personnel and to pay other expenses incurred by the Underwriter or
Advest, Inc. in its marketing and distribution activities, or were
retained by the Underwriter or Advest, Inc. to offset in part
distribution expenses in excess of amounts received under the plans in
prior periods.
The distribution plan requires that at least quarterly the Trustees of
the Fund review a written report with respect to the amounts expended
under the distribution plan and the purposes therefor. The Trustees of
the Fund have approved the distribution plan and determined that there
is a reasonable likelihood that the distribution plan will benefit
Northstar Growth and its respective shareholders. Rule 12b-1 requires
that while the distribution plan is in effect the selection of Trustees
of the Fund who are not interested persons of Northstar Growth be made
by the disinterested Trustees of the Fund.
THE RULE 12B-1 FEES IMPOSED ON SHARES HELD IN THE TRUST ARE REBATED TO
THE TRUST AND ARE USED TO REDUCE EXPENSES OF THE TRUST RESULTING IN
INCREASED DISTRIBUTIONS TO UNIT HOLDERS. UNIT HOLDERS WHO ACQUIRE SHARES
OF ADVANTAGE GROWTH THROUGH REINVESTMENT OF DIVIDENDS OR DISTRIBUTIONS
OR THROUGH REINVESTMENT AT THE TRUST'S TERMINATION WILL BEGIN TO INCUR
RULE 12B-1 FEES AT SUCH TIME AS SHARES ARE ACQUIRED.
Page 16
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trust described herein.
The Sponsor has obtained an exemptive order of the Securities and
Exchange Commission to enable it to deposit Northstar Growth shares
purchased for deposit in the Trust. Under the terms of the exemptive
order, the Sponsor has agreed to take certain steps to ensure that
investment in Northstar Growth shares is equitable to all parties and
particularly that the interests of the Unit holders are protected.
Northstar Growth has agreed to waive any sales charge, including any
contingent deferred sales load, on shares sold to the Trust.
Furthermore, First Trust Advisors L.P. has agreed to waive its usual fee
for acting as Evaluator of the Trust's portfolio with respect to that
portion of the portfolio comprised of Northstar Growth shares, since
information with respect to the price of Northstar Growth's shares is
readily available to it. In addition, the Indenture requires the Trustee
to vote all shares of Northstar Growth held in the Trust in the same
manner and ratio on all proposals as the vote of owners of Northstar
Growth shares not held by the Trust.
The value of Northstar Growth's shares, like the value of the Treasury
Obligations, will fluctuate over the life of the Trust and may be more
or less than the price at which they were deposited in the Trust.
Northstar Growth's shares may appreciate or depreciate in value (or pay
dividends) depending on the full range of economic and market influences
affecting the securities in which it is invested and the success of
Northstar Growth's management in anticipating or taking advantage of
such opportunities as they may occur. However, the Sponsor believes
that, upon termination of the Trust, even if the Northstar Growth shares
deposited in the Trust are worthless, an event which the Sponsor
considers highly unlikely, the Treasury Obligations will provide
sufficient principal to at least equal $1.00 per Unit (which is equal to
the per Unit value upon maturity of the Treasury Obligations) for those
individuals purchasing on the Initial Date of Deposit (or any other Date
when the value of the Units is $1.00 or less). This feature of the Trust
provides Unit holders with principal protection, although they might
forego any earnings on the amount invested. To the extent that Units are
purchased at a price less than $1.00 per Unit, this feature may also
provide a potential for capital appreciation.
Unless a Unit holder purchases Units of the Trust on the Initial Date of
Deposit (or another date when the value of the Units is $1.00 or less),
total distributions, including distributions made upon termination of
the Trust, may be less than the amount paid for a Unit.
The Trustee will have no power to vary the investments of the Trust,
i.e., the Trustee will have no managerial power to take advantage of
market variations to improve a Unit holder's investment but may dispose
of Securities only under limited circumstances. Of course, the portfolio
of Northstar Growth included in the Trust will be changing as the
Investment Adviser attempts to achieve Northstar Growth's objectives.
To the best of the Sponsor's knowledge, there is no litigation pending
as of the date of this Part Two Prospectus in respect of any Security
which might reasonably be expected to have a material adverse effect on
the Trust. Litigation may be instituted on a variety of grounds with
respect to the Securities. The Sponsor is unable to predict whether any
such litigation will be instituted, or if instituted, whether such
litigation might have a material adverse effect on the Trust.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. The Public Offering
Price is based on the aggregate bid side evaluation of the Treasury
Obligations and the net asset value of the Northstar Growth shares in
the Trust, plus or minus cash, if any, in the Principal Account held or
owned by the Trust, plus a maximum sales charge of 5.0% of the Public
Offering Price (equivalent to 5.263% of the net amount invested) divided
by the number of outstanding Units of the Trust.
The minimum purchase of the Trust is $1,000. The applicable sales charge
is reduced by a discount as indicated below for volume purchases:
Page 17
<TABLE>
<CAPTION>
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
____________________ __________ __________
<S> <C> <C>
100,000 but less than 250,000 .25% .2506%
250,000 but less than 500,000 .50% .5025%
500,000 but less than 750,000 1.00% 1.0101%
750,000 but less than 1,000,000 1.25% 1.2658%
1,000,000 or more 1.50% 1.5228%
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
broker/dealer, bank or other selling agent. The reduced sales charge
structure will apply on all purchases of Units in the Trust by the same
person on any one day from the broker/dealer, bank or other selling
agent. Additionally, Units purchased in the name of the spouse of a
purchaser or in the name of a child of such purchaser under 21 years of
age will be deemed, for the purposes of calculating the applicable sales
charge, to be additional purchases by the purchaser. The reduced sales
charges will also be applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary
account. With respect to the employees, officers and directors
(including their immediate families and trustees, custodians or a
fiduciary for the benefit of such person) of the Sponsor and
broker/dealers, banks or other selling agents and their subsidiaries,
the sales charge is reduced by 2% of the Public Offering Price for
purchases of Units during the secondary offering period.
The Public Offering Price of Units on the date of this Part Two
Prospectus may vary from the amount stated under "Summary of Essential
Information" in Part One in accordance with fluctuations in the prices
of the underlying Securities. The aggregate value of the Units of the
Trust shall be determined (a) on the basis of the bid prices of the
Treasury Obligations and the net asset value of the Northstar Growth
shares therein plus or minus a pro rata share of cash, if any, in the
Principal Account of the Trust, (b) if net bid prices are not available
for the Treasury Obligations, on the basis of bid prices for comparable
securities, (c) by determining the value of the Treasury Obligations on
the bid side of the market by appraisal, or (d) by any combination of
the above.
The secondary market Public Offering Price will be equal to the bid
price per Unit of the Treasury Obligations and the net asset value of
the Northstar Growth shares therein plus or minus a pro rata share of
cash, if any, in the Principal Account of the Trust plus the applicable
sales charge.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of Units on the date of settlement
provided payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange Act of
1934. Delivery of Certificates representing Units so ordered will be
made on the date of settlement relating to such order or shortly
thereafter. See "Rights of Unit Holders-How May Units be Redeemed?" for
information regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
Units repurchased in the secondary market may be offered by this Part
Two Prospectus at the secondary market public offering price determined
in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust for
sale in a number of states. Secondary market sales will be made to
dealers and others at prices which represent a concession or agency
commission of 3.1% of the Public Offering Price. However, resales of
Units of the Trust by such dealers and others to the public will be made
at the Public Offering Price described in the prospectus. The Sponsor
reserves the right to change the amount of the concession or agency
commission from time to time. Certain commercial banks are making Units
of the Trust available to their customers on an agency basis. A portion
of the sales charge paid by these customers is retained by or remitted
to the banks in the amounts indicated in the third preceding sentence.
Under the Glass-Steagall Act, banks are prohibited from underwriting
Trust Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In
Page 18
Texas and in certain other states, any banks making Units available must
be registered as broker/dealers under state law.
What are the Sponsor's Profits?
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a sales charge of 5.0%) or redeemed. The
secondary market public offering price of Units may be greater or less
than the cost of such Units to the Sponsor.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made shortly thereafter.
Certificates are transferable by presentation and surrender to the
Trustee properly endorsed or accompanied by a written instrument or
instruments of transfer. Certificates to be redeemed must be properly
endorsed or accompanied by a written instrument or instruments of
transfer. A Unit holder must sign exactly as his name appears on the
face of the certificate with the signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP") or such
other signature guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of the Trust; the number of Units issued or transferred; the
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon the
transfer unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Principal Distributed?
The Trustee will distribute any net income (other than accreted
interest) received with respect to any of the Securities in the Trust on
or about the Distribution Dates to Unit holders of record on the
preceding Record Date. See "Summary of Essential Information" in Part
One. Proceeds received from rebated Rule 12b-1 fees or on the sale of
any Securities in the Trust, to the extent not used to meet redemptions
of Units or pay expenses, will be distributed at least annually on each
Distribution Date to Unit holders of record on the preceding Record
Date. Income with respect to the original issue discount on the Treasury
Obligations in the Trust, will not be distributed currently, although
Unit holders will be subject to Federal income tax as if a distribution
had occurred. See "What is the Federal Tax Status of Unit Holders?"
Page 19
The Record Dates and Distribution Dates were established so as to occur
shortly after the record dates and the payment dates of Northstar
Growth. Northstar Growth normally pays quarterly dividends of its net
investment income. Net realized capital gains, if any, will be
distributed at least annually.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
the Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder under certain circumstances by
contacting the Trustee, otherwise the amount may be recoverable only
when filing a tax return. Under normal circumstances the Trustee obtains
the Unit holder's tax identification number from the selling broker.
However, a Unit holder should examine his or her statements from the
Trustee to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously provided
such number, one should be provided as soon as possible.
Within a reasonable time after the Trust is terminated, each Unit holder
will, upon surrender of his Units for redemption, receive: (i) the
number of shares of Northstar Growth attributable to his Units, which
will be distributed "in-kind" directly to his account, rather than
redeemed, (ii) a pro rata share of the amounts realized upon the
disposition of the Treasury Obligations and (iii) a pro rata share of
any other assets of the Trust, less expenses of the Trust, subject to
the limitation that Treasury Obligations may not be sold to pay for
Trust expenses. Not less than 60 days prior to the termination of the
Trust, Unit holders will be offered the option of having the proceeds
from the disposition of the Treasury Obligations in the Trust invested,
at the net asset value on the date such proceeds become available to the
Trust, in additional shares of Northstar Growth at net asset value. Such
shares will not be subject to a sales charge or a contingent deferred
sales load but such shares will incur Rule 12b-1 fees as do all other
shares held directly by investors in Northstar Growth. Unless a Unit
holder indicates that he wishes to reinvest such amounts, they will be
paid in cash, as indicated above. A Unit holder may, of course, at any
time after the shares are distributed to his account, instruct Northstar
Growth to redeem all or a portion of the shares in his account. Shares
of Northstar Growth, as more fully described in its prospectus, will be
redeemed at the then current net asset value. If within 180 days of the
termination of the Trust a registered owner of Units has not surrendered
the Units, the Trustee shall liquidate the shares of Northstar Growth
held for such owner and hold the funds to which such owner is entitled
until such Units are surrendered.
The Trustee will credit to the Income Account of the Trust any
dividends, distributions or rebated Rule 12b-1 fees received on the
Northstar Growth shares therein. All other receipts (e.g. return of
principal, etc.) are credited to the Principal Account of the Trust.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any governmental charges
payable out of the Trust.
How Can Distributions to Unit Holders be Reinvested?
Each Unit holder of the Trust will have distributions of principal or
income automatically invested in Northstar Growth shares (if Units are
properly registered in the name of the Unit holder) deposited at such
share's net asset value next computed, unless he indicates at the time
of purchase, or subsequently notifies the Trustee in writing, that he
wishes to receive cash payments. Shares of Northstar Growth obtained
through reinvestment will not be subject to a sales charge or a
contingent deferred sales load, although such shares will incur Rule 12b-
1 fees as do all other shares held directly by investors in Northstar
Growth. Reinvestment by the Trust in Northstar Growth shares will
normally be made as of the payable date of the Trust after the Trustee
deducts therefrom the expenses of the Trust.
Additional information with respect to the investment objectives and the
management of Northstar Growth is contained in its prospectus, which can
be obtained from the Sponsor or any broker/dealer with a currently
effective sales agreement with Advest, Inc.
Unit holders who are receiving distributions in cash may elect to
participate in the automatic reinvestment feature by filing with the
Trustee an election to have such distributions reinvested without a
sales charge. Such election must be received by the Trustee at least ten
days prior to the Record Date applicable to any distribution in order to
be in effect for such Record Date. Any such election shall remain in
effect until a subsequent notice is received by the Trustee.
Page 20
Exchange Privilege. THE EXCHANGE PRIVILEGE DOES NOT APPLY TO ADVANTAGE
GROWTH SHARES IN THE TRUST'S PORTFOLIO, ONLY TO A UNIT HOLDER'S
REINVESTMENT ACCOUNT.
Unit holders may exchange shares of a Northstar Fund for the same class
of shares of another Northstar Fund. Exchange requests in proper form
will be honored prior to 4:00 p.m. Eastern time. The following
conditions must be met for all exchanges among the Northstar Funds: (1)
the shares that will be acquired in the exchange (the "Acquired Shares")
are available for sales in the Unit holder's state of residence; (2) the
Acquired Shares will be registered to the same Unit holder account as
the shares to be surrendered (the "Exchanged Shares"); (3) the Exchanged
Shares must have been held in the Unit holder's account for at least 30
days prior to the exchange; (4) the account value of the Northstar Fund
whose shares are to be acquired must equal or exceed the minimum initial
investment amount required by that Fund after the exchange is
implemented; and (5) a properly executed exchange request has been
received by the Transfer Agent.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request,
without a sales charge. Each Northstar 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. In order to maintain a stable asset base in each Northstar Fund
and to reduce administrative expenses borne by each Fund, the Adviser
generally restricts shareholders to a maximum of six exchanges out of a
Northstar Fund each calendar year. If a shareholder exceeds this limit,
future exchange requests may be denied.
Each Northstar 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
Northstar Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the
fund into which the exchange is to be made before any exchange requests
are made.
The exchange of shares from one Northstar Fund to another is treated as
a sale of the Exchanged Shares and a purchase of the Acquired Shares for
Federal income tax purposes. The shareholder may, therefore, realize a
taxable gain or loss.
A Unit holder who wishes to make an exchange should first obtain and
review a current prospectus of the fund into which he or she wishes to
exchange. All exchanges shall be governed by the then current prospectus
of The Northstar Funds. Broker-dealers who process exchange orders on
behalf of their customers may charge a fee for their services. Such fee
may be avoided by making requests for exchange directly to the Transfer
Agent of Northstar Growth.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 1,000 Units. Within a reasonable time
after the end of each calendar year, the Trustee will furnish to each
person who at any time during the calendar year was a Unit holder of the
Trust the following information in reasonable detail: (1) a summary of
transactions in the Trust for such year; (2) any Securities sold during
the year and the Securities held at the end of such year by the Trust;
(3) the redemption price per 1,000 Units based upon a computation
thereof on the 31st day of December of such year (or the last business
day prior thereto); and (4) amounts of income and capital distributed
during such year.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender to the
Trustee at its corporate trust office in the City of New York of the
certificates representing the Units to be redeemed, or in the case of
uncertificated Units, delivery of a request for redemption, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as explained above (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates), and
payment of applicable governmental charges, if any. No redemption fee
Page 21
will be charged. On the third business day following such tender the
Unit holder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per 1,000 Units next computed after
receipt by the Trustee of such tender of Units. The "date of tender" is
deemed to be the date on which Units are received by the Trustee (if
such day is a day on which the New York Stock Exchange is open for
trading), except that as regards Units received after 4:00 p.m. Eastern
time (or as of any earlier time on a day on which the New York Stock
Exchange is scheduled in advance to close at such earlier time), the
date of tender is the next day on which the New York Stock Exchange is
open for trading and such Units will be deemed to have been tendered to
the Trustee on such day for redemption at the redemption price computed
on that day. Units so redeemed shall be cancelled.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"How are Income and Principal Distributed?" In the event the Trustee has
not been previously provided such number, one must be provided at the
time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose. All other amounts paid on redemption shall
be withdrawn from the Principal Account of the Trust.
The Trustee is empowered to sell Securities of the Trust in order to
make funds available for redemption. To the extent that Securities are
sold, the size and diversity of the Trust will be reduced. Such sales
may be required at a time when Securities would not otherwise be sold
and might result in lower prices than might otherwise be realized.
Shares of Northstar Growth will be sold to meet redemptions of Units
before Treasury Obligations, although Treasury Obligations may be sold
if the Trust is assured of retaining a sufficient principal amount of
Treasury Obligations to provide funds upon maturity of the Trust at
least equal to $1.00 per Unit.
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the bid price of the
Treasury Obligations and the net asset value of the Northstar Growth
shares in the Trust plus or minus cash, if any, in the Principal Account
of the Trust. The Redemption Price per 1,000 Units is the pro rata share
of each Unit determined by the Trustee by adding: (1) the cash on hand
in the Trust other than cash deposited in the Trust to purchase
Securities not applied to the purchase of such Securities; (2) the
aggregate value of the Securities (including "when issued" contracts, if
any) held in the Trust, as determined by the Evaluator on the basis of
bid prices of the Treasury Obligations and the net asset value of the
Northstar Growth shares next computed; and (3) dividends receivable on
Northstar Growth shares trading ex-dividend as of the date of
computation and amounts accrued, if any, for rebated Rule 12b-1 fees;
and deducting therefrom: (1) amounts representing any applicable taxes
or governmental charges payable out of the Trust; (2) an amount
representing estimated accrued expenses of the Trust, including but not
limited to fees and expenses of the Trustee (including legal and
auditing fees), the Evaluator, the Supervisor and counsel fees, if any;
(3) cash held for distribution to Unit holders of record of the Trust as
of the business day prior to the evaluation being made; and (4) other
liabilities incurred by the Trust; and finally dividing the results of
such computation by the number of Units of the Trust outstanding as of
the date thereof.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed (other than
for customary weekend and holiday closings) or during which the
Securities and Exchange Commission determines that trading on that
Exchange is restricted or any emergency exists, as a result of which
disposal or evaluation of the Securities is not reasonably practicable,
or for such other periods as the Securities and Exchange Commission may
by order permit. Under certain extreme circumstances, the Sponsor may
apply to the Securities and Exchange Commission for an order permitting
a full or partial suspension of the right of Unit holders to redeem
their Units. The Trustee is not liable to any person in any way for any
loss or damage which may result from any such suspension or postponement.
Page 22
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. in the City of New York
on the same business day and by making payment therefor to the Unit
holder not later than the day on which the Units would otherwise have
been redeemed by the Trustee. Units held by the Sponsor may be tendered
to the Trustee for redemption as any other Units. In the event the
Sponsor does not purchase Units, the Trustee may sell Units tendered for
redemption in the over-the-counter market, if any, as long as the amount
to be received by the Unit holder is equal to the amount he would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Securities be Removed from the Trust?
The portfolio of the Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of a Security in the
unlikely event that an issuer of a Security defaults in the payment of
dividends or interest or there exist certain other materially adverse
conditions described in the Indenture.
The Trustee may also sell Securities designated by the Sponsor, or if
not so directed, in its own discretion, for the purpose of redeeming
Units of the Trust tendered for redemption and the payment of expenses;
provided, however, that in the case of Securities sold to meet
redemption requests, Treasury Obligations may only be sold if the Trust
is assured of retaining a sufficient principal amount of Treasury
Obligations to provide funds upon maturity of the Trust at least equal
to $1.00 per Unit. Treasury Obligations may not be sold to meet Trust
expenses.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, The First Trust Special Situations Trust, The First Trust
Insured Corporate Trust, The First Trust of Insured Municipal Bonds and
The First Trust GNMA. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $9 billion in First Trust
unit investment trusts have been deposited. The Sponsor's employees
include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 1996, the total partners' capital of Nike Securities L.P.
was $9,005,203 (audited). (This paragraph relates only to the Sponsor
and not to the Trust or to any series thereof. The information is
included herein only for the purpose of informing investors as to the
financial responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be
made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trusts
may call the Customer Service Help Line at 1-800-682-7520. The Trustee
is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Securities. For information
Page 23
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Securities. In the event of the failure of the
Sponsor to act under the Indenture, the Trustee may act thereunder and
shall not be liable for any action taken by it in good faith under the
Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor and the Trustee,
in which event the Sponsor and the Trustee are to use their best efforts
to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
Page 24
OTHER INFORMATION
How May the Indenture Be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the maturity,
redemption or other disposition of the last of the Treasury Obligations
held in the Trust but in no event beyond the Mandatory Termination Date
indicated under "Summary of Essential Information" in Part One. The
Trust may be liquidated at any time by consent of 100% of the Unit
holders of the Trust or by the Trustee in the event that Units of the
Trust not yet sold aggregating more than 60% of the Units of the Trust
are tendered for redemption by the Underwriters, including the Sponsor.
If the Trust is liquidated because of the redemption of unsold Units of
the Trust by the Underwriters, the Sponsor will refund to each purchaser
of Units of the Trust the entire sales charge paid by such purchaser. In
the event of termination, written notice thereof will be sent by the
Trustee to all Unit holders of the Trust. Within a reasonable period
after termination, the Trustee will follow the procedures set forth
under "How are Income and Principal Distributed?"
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Experts
The financial statements of the Trust appearing in Part One of this
Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
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Page 27
CONTENTS:
The Advantage Growth and Treasury Securities Trust:
What is The Advantage Growth and Treasury Securities
Trust? 3
What are the Expenses and Charges? 3
What is the Federal Tax Status of Unit Holders? 4
Why are Investments in the Trust Suitable
for Retirement Plans? 7
Portfolio:
What are Zero Coupon Treasuries? 7
What is The Northstar Growth Fund? 8
Selected per Share Data and Ratios for a
Northstar Growth Share Outstanding
throughout the Period 8
What are Northstar Growth's Investment
Objectives and Policies? 11
Who is the Investment Adviser of Northstar Growth? 15
What are Some Additional Considerations
for Investors? 17
Public Offering:
How is the Public Offering Price Determined? 17
How are Units Distributed? 18
What are the Sponsor's Profits? 19
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 19
How are Income and Principal Distributed? 19
How Can Distributions to Unit Holders
be Reinvested? 20
What Reports Will Unit Holders Receive? 21
How May Units be Redeemed? 21
How May Units be Purchased by the Sponsor? 23
How May Securities be Removed from the Trust? 23
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 23
Who is the Trustee? 23
Limitations on Liabilities of Sponsor and Trustee 24
Who is the Evaluator? 24
Other Information:
How May the Indenture be Amended
or Terminated? 25
Legal Opinions 25
Experts 25
___________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (REGISTERED TRADEMARK)
The Advantage Growth and Treasury Securities Trust
Prospectus
Part Two
July 31, 1997
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 28
CONTENTS OF POST-EFFECTIVE AMENDMENT
OF REGISTRATION STATEMENT
This Post-Effective Amendment of Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Auditors
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, Advantage Growth and Treasury Securities Trust,
Series 1, certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment of its Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized
in the Village of Lisle and State of Illinois on July 31, 1998.
ADVANTAGE GROWTH AND TREASURY
SECURITIES TRUST, SERIES 1
(Registrant)
ByNIKE SECURITIES L.P.
(Depositor)
ByRobert M. Porcellino
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment of Registration Statement has been
signed below by the following person in the capacity and on the
date indicated:
Signature Title* Date
Robert D. Van Kampen Director of )
Nike Securities )
Corporation, the )
General Partner ) July 31, 1998
of Nike Securities L.P. )
)Robert M. Porcellino
David J. Allen Director of ) Attorney-in-Fact**
Nike Securities
Corporation, the
General Partner
of Nike Securities L.P.
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with the Amendment No. 1 to Form S-6 of The First Trust
Combined Series 258 (File No. 33-63483) and the same is
hereby incorporated herein by this reference.
S-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated July 2, 1997 in this
Post-Effective Amendment to the Registration Statement and
related Prospectus of Advantage Growth and Treasury Securities
Trust dated July 28, 1997.
ERNST & YOUNG
Chicago, Illinois
July 27, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial
information extracted from Post Effective
Amendment to form S-6 and is qualified in its
entirety by reference to such Post Effective
Amendment to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> Advantage G&T Trust
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 2,773,994
<INVESTMENTS-AT-VALUE> 3,445,204
<RECEIVABLES> 0
<ASSETS-OTHER> 3,935
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,449,139
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 740
<TOTAL-LIABILITIES> 740
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,773,994
<SHARES-COMMON-STOCK> 2,449,829
<SHARES-COMMON-PRIOR> 2,929,407
<ACCUMULATED-NII-CURRENT> 3,195
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 671,210
<NET-ASSETS> 3,448,399
<DIVIDEND-INCOME> 78,401
<INTEREST-INCOME> 133,524
<OTHER-INCOME> 0
<EXPENSES-NET> 5,435
<NET-INVESTMENT-INCOME> 206,490
<REALIZED-GAINS-CURRENT> 97,933
<APPREC-INCREASE-CURRENT> 444,886
<NET-CHANGE-FROM-OPS> 749,309
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,040
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 59,320
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 479,578
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 43,638
<ACCUMULATED-NII-PRIOR> 7,441
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
