[LOGO]
TRUST
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1997
[PICTURE]
<PAGE>
NORTHSTAR TRUST
SEMI-ANNUAL REPORT,
APRIL 30, 1997
Dear Shareholders:
We are pleased to provide you with the semi-annual report of the Northstar Funds
for the six month period ending April 30, 1997. We are gratified with your
decision to entrust your assets to the Northstar Funds and are confident that we
can assist you in reaching your financial objectives. Our goal is to provide you
with consistent, superior investment results through fundamental research,
analysis, and traditional investment disciplines. Following this letter is a
summary of the results of each Fund by its respective portfolio manager. We hope
you will find these informative.
During the past six months the U.S. financial markets have been supported by
strong growth in the economy, above average corporate profit gains, and
surprisingly subdued inflation.
Concerns last fall were centered in the belief that a perfect environment
(moderate growth and low inflation) must be maintained for the stock market to
continue to do well. Valuations and profit margins seemed high. With
unemployment declining, wages rising, and inflation trending up during most of
1996, any acceleration of these trends was viewed as a problem for both bond and
stock prices. In fact, as the economic strength of the December quarter, and
later the March quarter became evident, two market corrections ensued. These
however, proved short lived as inflation was actually trading down rather than
accelerating. Productivity gains more than offset wage increases, allowing
corporate profit margins to remain high and consumer prices low. Global growth
in industrialized countries outside the U.S. has also been slower than expected,
allowing capacity to keep up with demand. This strong growth has allowed profit
increases, employment, and personal incomes to remain high. This resulted in
unforeseen tax revenues significantly reducing the Federal deficit which in turn
is facilitating political compromise on budget issues. The U.S. dollar has
remained strong helping inflation. While the Federal Reserve has raised short
term rates slightly, monetary policy has not become restrictive and longer term
rates are about the same as six months ago. In short, the environment has been
exceptionally good.
Looking to the balance of the year, most of the same earlier questions
persist but the current outlook remains favorable. Real incomes are rising,
there are few signs of increased inflation, and growth appears to have moderated
recently. There does not appear to be the type of excesses present which would
necessitate either a recession or an overheated inflationary condition.
In closing, we reiterate that attempts to "time" the market often prove
counterproductive. Investors are strongly urged to focus on the long term.
Consistent disciplined investing is the proven method of achieving attractive
returns and meeting your financial objectives. We continue to support this
philosophy and look forward to serving your investment needs in the future.
Sincerely,
/s/ Mark L. Lipson
- ------------------
Mark L. Lipson
President
June 1997
<PAGE>
[PICTURE]
LOUIS G. NAVELLIER
NORTHSTAR GROWTH + VALUE FUND
THE MARKETS
o The Northstar Growth + Value Fund opened November 18, 1996. During
the period November 18, 1996 to April 30, 1997, the S&P rose 8.7%,
the NASDAQ Composite rose 0.5% and the NASDAQ Industrials were
actually down (9.0%), indicating that the equity advance over this
period has been very narrow and limited to a few industry groups.
o As investors might expect, the first quarter earnings reports for a
broad range of stocks have been outstanding. The U.S. economy had
its strongest economic growth quarter in several years. The first
quarter earnings growth for large capitalization stocks in the S&P
500 were also outstanding, up over 14% compared to analysts'
estimates of approximately 12% for the S&P 500. As indicated above,
the large cap stocks continued to outperform the small-to-mid cap
stocks over the period, until most recently when trading volume on
NASDAQ began to accelerate. The surge in NASDAQ volume was caused
by a drop in interest rates as well as a rotation by professional
managers out of large capitalization stocks into the small-to-mid
capitalization stocks that we favor. Valuations in the small to mid
cap equity market continue to look attractive as these markets are
selling at a discount to the larger broad based indices.
THE FUND
o The Fund was down (6.0%), (6.2%), and (6.2%) for class A, class B,
and, class C, respectively, from November 18, 1996 to April 30,
1997.
o The top performing stocks in the Fund for the period ended April
30, 1997 included: U.S. Airways Group, Compuware, Dell Computer,
Maverick Tube, and Brightpoint, Inc. Among the underperformers
were: Herbalife, Finish Line, Inc., FirstPlus Financial Group,
Imperial CR Industries and Medicis Parmeceutical.
CURRENT STRATEGY
o During the past year, the Russell 2000 has lagged the S&P 500 by
almost 30%, which is the largest discrepancy between small and
large capitalization stocks in several decades. At almost 22 times
current earnings it is hard to imagine how the S&P 500 will
continue to rally, especially as its earnings momentum decelerates
in the upcoming months. In contrast, the Russell 2000 continues to
trade at only 17 times current earnings despite the fact that it is
forecasted to have approximately 35% earnings growth this year.
With the resurgence in both NASDAQ trading volume and technology
stocks, we expect that Earnings Momentum, as a strategy, will
become increasingly dominant. In the Navellier proprietary stock
selection models, the weight and emphasis assigned to earnings
momentum has increased considerably during the past few months.
Earnings momentum strategies are very dependent on persistent
buying pressure and strong institutional rotation into key industry
groups, especially technology stocks. As a result, we expect that
an earnings momentum strategy, which has performed poorly during
the past year, will come back with a vengeance and lead the NASDAQ
market and technology stocks dramatically higher in the upcoming
months. We sincerely feel that the current environment is very
similar to the breakout that NASDAQ experienced in 1990, 1992, and
1994 after suffering from prolonged liquidity droughts that plagued
small-to-mid capitalization stocks. After NASDAQ surged on higher
trading volume in 1990, 1992, and 1994, it continued to rally for
16 to 23 months. We fully expect that NASDAQ will continue to rally
strongly since the underlying fundamentals of most small-to-mid
capitalization stocks remain outstanding, especially when compared
to their large capitalization counterparts.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/97) TOTAL NET ASSETS $46,155,385
- ------------------------------------------------------------------------------------------------------------------------------------
TOP 10 HOLDINGS TOP 5 INDUSTRIES SEC AVERAGE ANNUAL RATES OF RETURN
NAME % FUND (by percentage of net asset) (at maximum applicable sales charge)
<S> <C> ------------------------------------------------
1 BankAmerica Corp. 2.5% For the period
2 Compuware Corp. 2.5% Retailer 9.8% Inception 5 years 11/18/96-4/30/97
3 Herman Miller, Inc. 2.5% ------------------------------------------------
4 Stein Mart, Inc. 2.3% Computer Class A (10.48%) n/a (10.48%)
5 Brightpoint, Inc. 2.0% Hardware 7.6% ------------------------------------------------
6 Intel Corp. 2.0% Class B (10.89%) n/a (10.89%)
7 Jabil Circuit, Inc. 1.8% Banking 5.9% ------------------------------------------------
8 Consolidated Graphics, Inc. 1.6% Class C (7.14%) n/a (7.14%)
9 Dell Computer Corp. 1.6% Oil & Gas 5.9% ------------------------------------------------
10 du Pont (E.I.) De Nemours & Co. 1.6%
------ Food 5.1% CUMULATIVE TOTAL RETURNS
20.4% (do not reflect sales charge)
------ ------------------------------------------------
------ For the period
Inception 5 years 11/18/96-4/30/97
------------------------------------------------
Class A (6.00%) n/a (6.00%)
------------------------------------------------
Class B (6.20%) n/a (6.20%)
------------------------------------------------
Class C (6.20%) n/a (6.20%)
------------------------------------------------
</TABLE>
3
<PAGE>
NORTHSTAR GROWTH + VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS -- 94.46%
AEROSPACE/AIRCRAFT PARTS -- 2.38%
United Technologies Corp. 5,300 $ 400,813
U.S. Airways Group, Inc. @ 21,500 696,062
-----------
1,096,875
-----------
AIR FREIGHT/COURIERS -- 2.66%
Eagle U.S.A. Airfreight, Inc. @ 30,900 625,725
Expeditors International of Washington, Inc. 24,000 600,000
-----------
1,225,725
-----------
APPAREL/FABRIC -- 3.17%
Fruit of the Loom, Inc. @ 10,400 374,400
Jones Apparel Group, Inc. @ 15,000 626,250
VF Corp. 6,400 461,600
-----------
1,462,250
-----------
AUTO/TRUCK MANUFACTURERS -- 1.29%
PACCAR, Inc. 8,500 593,938
-----------
BANKING -- 5.92%
BankAmerica Corp. 10,000 1,168,750
City National Corp. 24,000 549,000
Comerica, Inc. 9,000 526,500
GreenPoint Financial Corp. 8,800 487,300
-----------
2,731,550
-----------
BEVERAGES -- 2.31%
Anheuser-Busch Cos., Inc. 10,000 428,750
Coca-Cola Co. 10,000 636,250
-----------
1,065,000
-----------
CHEMICALS -- 2.51%
du Pont (E.I.) De Nemours & Co. 7,000 742,875
Innovex, Inc. 13,000 416,000
-----------
1,158,875
-----------
COMPUTER HARDWARE -- 7.55%
Dell Computer Corp. @ 9,000 753,187
Jabil Circuit, Inc. @ 17,500 846,562
Keane, Inc. @ 15,000 695,625
Quantum Corp. @ 13,800 575,288
Western Digital Corp. @ 10,000 616,250
-----------
3,486,912
-----------
</TABLE>
4
<PAGE>
NORTHSTAR GROWTH + VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
COMPUTER SOFTWARE -- 3.16%
Compuware Corp. @ 30,000 $ 1,132,500
Microsoft Corp. @ 2,700 328,050
-----------
1,460,550
-----------
CONGLOMERATES -- 1.74%
GenCorp, Inc. 30,000 562,500
PHH Corp. 5,000 242,500
-----------
805,000
-----------
COSMETICS/PERSONAL CARE -- 2.70%
Alberto-Culver Co. 20,000 582,500
Colgate-Palmolive Co. 6,000 666,000
-----------
1,248,500
-----------
DATA COMMUNICATION/NETWORKING -- 1.02%
Black Box Corp. @ 20,000 472,500
-----------
ELECTRONICS -- 1.90%
Brightpoint, Inc. @ 40,000 875,000
-----------
FINANCIAL SERVICES -- 2.98%
FirstPlus Financial Group, Inc. @ 30,000 663,750
Student Loan Marketing Association 6,000 709,500
-----------
1,373,250
-----------
FOOD -- 5.09%
Campbell Soup Co. 12,000 613,500
Interstate Bakeries Corp. 10,000 518,750
Quality Food Centers, Inc. @ 3,000 120,375
Riser Foods, Inc. 16,000 554,000
Safeway, Inc. @ 12,200 544,425
-----------
2,351,050
-----------
HEALTHCARE -- 1.52%
Counsel Corp. @ 12,000 156,000
Safeskin Corp. @ 24,300 543,713
-----------
699,713
-----------
HEALTHCARE/PHARMACEUTICAL -- 0.96%
Bristol-Myers Squibb Co. 6,800 445,400
-----------
HOME FURNISHINGS -- 3.08%
Interface, Inc. 16,400 366,950
Mohawk Industries, Inc. @ 20,000 447,500
O'Sullivan Industries Holdings, Inc. @ 45,000 607,500
-----------
1,421,950
-----------
HOUSEHOLD PRODUCTS -- 3.68%
Clorox Co. 5,000 636,875
U.S. Industries, Inc. @ 15,000 541,875
WestPoint Stevens, Inc. @ 13,300 520,362
-----------
1,699,112
-----------
</TABLE>
5
<PAGE>
NORTHSTAR GROWTH + VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
INDUSTRIAL AND COMMERCIAL SERVICES -- 2.66%
MasTec, Inc. @ 20,000 $ 580,000
Tubos de Acero de Mexico SA @ ** 24,000 393,000
Valspar Corp. 9,000 256,500
-----------
1,229,500
-----------
INSURANCE -- 4.63%
Ace, Ltd. 10,000 600,000
Allstate Corp. 8,000 524,000
Conseco, Inc. 11,500 475,812
Orion Capital Corp. 6,000 375,750
Progressive Corp. 2,100 159,863
-----------
2,135,425
-----------
OFFICE EQUIPMENT/SUPPLIES -- 3.73%
Avery Dennison Corp. 16,000 588,000
Herman Miller, Inc. 35,000 1,133,125
-----------
1,721,125
-----------
OIL -- 2.56%
Parker & Parsley Petroleum Co. 14,200 468,600
Schlumberger Ltd. 5,000 553,750
Shell Transport & Trading Co. ** 1,500 159,563
-----------
1,181,913
-----------
OIL & GAS -- 0.46%
Texaco, Inc. 2,000 211,000
-----------
OIL & GAS EXPLORATION -- 5.90%
Camco International, Inc. 12,000 532,500
Falcon Drilling Co., Inc. @ 10,000 382,500
Global Marine, Inc. @ 25,000 503,125
Maverick Tube Corp. @ 22,500 492,187
Tosco Corp. 14,700 435,488
USX-Marathon Group 13,600 375,700
-----------
2,721,500
-----------
PHARMACEUTICAL -- 0.69%
Medicis Pharmaceutical Corp. @ 13,050 319,725
-----------
POWER SUPPLY -- 0.99%
American Power Conversion Corp. @ 23,700 456,225
-----------
PRINTING & PUBLISHING -- 1.58%
Consolidated Graphics, Inc. @ 30,000 731,250
-----------
</TABLE>
6
<PAGE>
NORTHSTAR GROWTH + VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Shares/
Security Principal Amount Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
RETAILERS -- 9.76%
Costco Cos., Inc. @ 18,800 $ 542,850
Eagle Hardware & Garden, Inc. @ 30,000 562,500
Finish Line, Inc. @ 35,000 360,937
Goody's Family Clothing, Inc. @ 25,300 442,750
Pacific Sunwear Of California @ 7,000 218,750
Ross Stores, Inc. 18,000 506,250
Stein Mart, Inc. @ 37,000 1,073,000
TJX Cos., Inc. 4,900 231,525
Tuesday Morning Corp. @ 20,000 565,000
-----------
4,503,562
-----------
SAVINGS & LOAN -- 0.63%
Imperial Credit Industries, Inc. @ 20,000 291,250
-----------
SEMICONDUCTOR -- 3.77%
Intel Corp. 6,000 918,750
National Semiconductor Corp. @ 21,500 537,500
Vitesse Semiconductor Corp. @ 9,000 283,500
-----------
1,739,750
-----------
TELECOMMUNICATIONS -- 1.24%
Telecomunicacoes Brasileiras SA ** 5,000 573,750
-----------
VEHICLE PARTS & EQUIPMENT -- 0.24%
Tower Automotive, Inc. @ 3,000 111,000
-----------
TOTAL COMMON STOCKS
(cost $43,370,003) 43,600,125
-----------
TOTAL INVESTMENT SECURITIES -- 94.46%
(cost $43,370,003) 43,600,125
REPURCHASE AGREEMENT -- 4.70%
Agreement with State Street Bank and Trust bearing interest at
5.20% dated 4/30/97, to be repurchased 5/01/97 in the amount of
$2,169,313 and collateralized by $2,210,000 U.S. Treasury Bills,
5.125% due 2/28/98,
value $2,213,235
(cost $2,169,000) $2,169,000 2,169,000
OTHER ASSETS LESS LIABILITIES -- 0.84% 386,260
-----------
NET ASSETS -- 100.00% $46,155,385
-----------
-----------
</TABLE>
@ Non-income producing.
** American Depository Receipts.
See accompanying notes to financial statements.
7
<PAGE>
[PICTURE]
CHARLES H. BRANDES
NORTHSTAR INTERNATIONAL VALUE FUND
THE MARKETS
o The international markets performed favorably during the six-month
period ended April 30, 1997. The Latin American markets performed
exceptionally well, with Brazil up 38.4% followed by Mexico at
18.5%. The European markets were also strong performers led by
Spain which was up 24.7%. The Asian markets were generally weak
with Japan down 13.3%.
o Many leading European companies surged as the market acknowledged
that their strident efforts at implementing U.S.-style corporate
restructuring are showing signs of impacting their bottom lines.
The market is continuing to recognize the increased focus on
enhancing shareholder value among many CEOs.
THE FUND
o The Fund performed strongly during the period with a total rate of
return of 15.7% for class A, 0.7% for class B, and 14.8% for class
C, which compares favorably to the Morgan Stanley EAFE index which
returned 1.6%. The Lipper Index of International Equity Funds
returned 8.5% for the same period.
o European holdings were the largest contributors to the period's
performance with Spain, France, and Italy leading the way. Latin
issues were also up strongly led by our Brazilian and Mexican
holdings. Telecommunciations was the strongest industry
contributor.
o The Fund continued to benefit from an underweighting in Japanese
issues and an overweighting in European issues. Thirty-five percent
of the Fund's holdings were up over 10% for the period.
o Our largest regional commitment is to Europe with France, Italy,
and Spain the most significant country components. Nineteen
countries are represented in the Fund. The largest industry
commitments are to Telecommunications, Electrical & Electronics,
and Food and Household Products. Sixteen industries are included in
the Fund.
CURRENT STRATEGY
o The bottom-up, value philosophy used in managing the Fund will be
consistently applied to find the best opportunities available in
non-U.S. markets. There is no focus on top-down macroeconomic
evaluations or forecasts in structuring the Fund. Country and
industry exposure are exclusively a residual of the purchase of
individual businesses that meet the strict value criteria.
o The fundamental valuation characteristics of the Fund such as Price
to Earnings, Price to Book Value and Price to Cash Flow ratios
reflect, and will continue to reflect, significant discounts to the
world market averages. This absolute value focus has performed very
favorably in declining market environments as well as doing well
over long-term market cycles.
o The Fund will endeavor to stay fully invested in non-U.S. equities
and will not attempt to anticipate short-term market movements. We
will hold the best values available without bias to either country
or industry.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/97) TOTAL NET ASSETS $43,996,832
- -------------------------------------------------------------------------------------------------------------------
TOP 10 HOLDINGS TOP 5 INDUSTRIES SEC AVERAGE ANNUAL RATES OF RETURN
NAME % FUND (by percentage of net asset) (at maximum applicable sales charge)
<S> <C> ---------------------------------------
1 Alcatel Alsthom 5.0% Telecommunications 18.63% Inception 5years 1year
2 Stet Societa Finanzioria 4.6% ---------------------------------------
Tele. S.p.A. Electrical & Class A 13.32% n/a 11.64%
3 Daimler-Benz AG 4.4% Electronics 11.92% ---------------------------------------
4 Nestle SA 4.4% Class B -10.49% n/a -10.49%
5 Fuji Photo Film Co. 3.9% Food & Household ---------------------------------------
6 Groupe Danone 3.8% Products 10.44% Class C 15.63% n/a 16.21%
7 Hitachi Ltd. 3.2% ---------------------------------------
8 Telefonica de Espana SA 3.1% Banking 8.43%
9 Tele Danmark A/S 3.0% CUMULATIVE TOTAL RETURNS
10 Telefonos de Mexixo SA 2.9% Energy 6.26% (do not reflect sales charge)
------ --------------------------------------
38.3% Inception 5years 1year
------ --------------------------------------
------ Class A 37.65% n/a 17.21%
--------------------------------------
Class B 0.70% n/a 0.70%*
--------------------------------------
Class C 36.97% n/a 17.38%
--------------------------------------
</TABLE>
* For the period 4/18/97-4/30/97
8
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS -- 91.32%
AUTOMOTIVE -- 6.24%
Daimler-Benz AG (Germany) 26,100 $ 1,938,133
PSA Peugeot Citroen (France) 8,110 807,318
-----------
2,745,451
-----------
BANKING -- 8.43%
Argentaria SA (Spain) 13,060 582,410
Banco Bilbao Vizcaya SA (Spain) 13,500 908,587
Den Danske Bank (Denmark) 12,280 1,062,042
Istituto Mobiliare Italiano S.p.A. (Italy) 135,700 1,155,947
-----------
3,708,986
-----------
BEVERAGES & TOBACCO -- 2.79%
Guinness PLC (United Kingdom) 109,400 904,279
Molson Cos. Ltd. (Canada) 19,440 321,449
-----------
1,225,728
-----------
CHEMICALS -- 1.19%
Imperial Chemical Industries PLC (United Kingdom) 46,000 522,626
-----------
DATA PROCESSING & REPRODUCTION -- 0.03%
Scitex Corp. Ltd. (Israel) 2,200 15,125
-----------
ELECTRICAL & ELECTRONICS -- 11.92%
ABB AG @ (Switzerland) 350 423,818
Alcatel Alsthom (France) 19,650 2,185,017
Hitachi Ltd. (Japan) 157,200 1,424,193
Siemens AG (Germany) 22,400 1,213,258
-----------
5,246,286
-----------
ENERGY -- 6.26%
Elf Aquitaine SA (France) 9,695 940,182
Repsol SA (Spain) 22,990 963,912
YPF Sociedad Anonima ** (Argentina) 30,740 849,192
-----------
2,753,286
-----------
FOOD & HOUSEHOLD PRODUCTS -- 10.44%
Grand Metropolitan PLC (United Kingdom) 121,500 1,014,141
Groupe Danone (France) 11,370 1,655,872
Nestle SA (Switzerland) 1,585 1,924,666
-----------
4,594,679
-----------
GOLD MINES -- 1.80%
De Beers Centenary AG (South Africa) 22,000 791,634
-----------
</TABLE>
9
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
INSURANCE -- 5.29%
Assurances Generales De France (France) 20,450 $ 665,374
Baloise Holding Ltd. @ (Switzerland) 354 746,856
ING Groep N.V. (Netherlands) 3,860 151,563
Tokio Marine & Fire Insurance Co. (Japan) 78,100 762,941
-----------
2,326,734
-----------
MACHINERY & ENGINEERING -- 1.51%
Schindler Holding AG (Switzerland) 193 233,706
VA Technologie AG (Austria) 2,760 428,890
-----------
662,596
-----------
METALS -- STEEL -- 2.02%
Iscor Ltd. (South Africa) 932,150 645,681
Pohang Iron & Steel Co. Ltd. (South Korea) 10,090 243,421
-----------
889,102
-----------
MULTI -- INDUSTRY -- 5.22%
BTR PLC (United Kingdom) 208,650 852,185
Jardine Matheson Holdings Ltd. (Singapore) 156,800 862,400
Pacific Dunlop Ltd. (Australia) 215,800 582,288
-----------
2,296,873
-----------
RECREATION PRODUCTS -- 3.86%
Fuji Photo Film Co. (Japan) 44,500 1,700,280
-----------
TELECOMMUNICATIONS -- 18.63%
Royal PTT Nederland NV (Netherlands) 27,740 985,273
Stet Societa' Finanzioria Telefonica S.p.A. (Italy) 426,300 2,015,506
Tele Danmark A/S (Denmark) 27,090 1,302,977
Telecomunicacoes Brasileiras SA ** (Brazil) 10,940 1,255,365
Telefonica de Espana SA (Spain) 53,390 1,367,570
Telefonos de Mexico SA ** (Mexico) 30,830 1,271,737
-----------
8,198,428
-----------
</TABLE>
10
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares/Principal Amount Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
UTILITIES -- ELECTRICAL & GAS -- 5.69%
Berliner Kraft-und Licht (Germany) 12,800 $ 325,211
BG PLC (United Kingdom) 173,700 501,112
Centrais Eletricas Brasileiras SA (Brazil) 21,600 483,624
EVN Energie-Versorgung Niederoesterreich AG (Austria) 3,250 402,032
Italgas S.p.A. (Italy) 205,000 701,023
Korea Electric Power Corp. ** (South Korea) 5,240 89,080
-----------
2,502,082
-----------
TOTAL COMMON STOCKS
(cost $35,669,920) 40,179,896
-----------
RIGHTS -- 0.00%
AUTOMOTIVE -- 0.00%
Daimler-Benz AG (Germany), (expires 5/13/97) 26,100 0
-----------
TOTAL RIGHTS
(cost $0) 0
-----------
TOTAL INVESTMENT SECURITIES -- 91.32%
(cost $35,669,920) 40,179,896
REPURCHASE AGREEMENT -- 5.74%
Agreement with State Street Bank and Trust bearing interest
at 5.20% dated 4/30/97 to be repurchased 5/01/97 in the
amount of $2,524,365 and collateralized by $2,575,000 U.S.
Treasury Bills, 5.125% due 2/28/98, value $2,578,770
(cost $2,524,000) $2,524,000 2,524,000
OTHER ASSETS LESS LIABILITIES -- 2.94% 1,292,936
-----------
NET ASSETS -- 100.00% $43,996,832
-----------
-----------
</TABLE>
@ Non-income producing.
** American Depositary Receipts.
PERCENT BY COUNTRY % FUND
- ------------------------------ ------
France 14.2%
Japan 8.8%
Italy 8.8%
Spain 8.7%
United Kingdom 8.6%
Germany 7.9%
Switzerland 7.6%
Denmark 5.4%
South Africa 3.3%
Mexico 2.9%
Brazil 2.9%
Netherlands 2.6%
Singapore 2.0%
Argentina 1.9%
Austria 1.9%
Australia 1.3%
Brazil 1.1%
South Korea 0.8%
Canada 0.7%
Israel 0.0%
Repo 5.7%
Other assets less liabilities 2.9%
------
100.0%
------
------
See accompanying notes to financial statements.
11
<PAGE>
[PICTURE] [PICTURE]
GEOFFREY WADSWORTH JOHN W. FISHER
NORTHSTAR INCOME AND GROWTH
THE MARKETS
o The Dow Jones Industrials and the S&P 500 Index posted strong gains
of 16.3% and 13.6%, respectively, during the six months ended April
30. Large capitalization blue chip stocks were the leaders by a
wide margin as smaller companies represented in the NASDAQ
Composite gained only 3.2%.
o Interest rates were volatile during the period but trended up with
rising inflation fears causing a decline in price for 10 year
treasuries of (2.8%) and for 30 year treasury bonds of (5.2%).
Adding interest, the returns for these highest quality benchmarks
were 0.4% and (2.0%), respectively.
o The equity market was buoyed by surprisingly strong economic growth
along with productivity gains which led to stronger than expected
earnings and very little inflation.
THE FUND
o The Funds class A, B, and C shares had a total return of 7.2%,
6.8%, and 6.9%, respectively, for the six months. This compares to
6.9% for the Lipper Balanced Fund Index.
o The favorable performance was driven by the common stock holdings
which were 55% of the fund in October and were increased to as high
as 67%, before being cut back to 61% in April.
o Among the strong equity performers were individual stocks from
several sectors such as Bristol Myers, Exxon, G.E., 3M, and Merck.
The income oriented holdings including straight bonds and
convertibles contributed little or nothing to the Fund.
o Equity holdings have been increasingly focused on a smaller number
of large capitalization dividend paying stocks with an overall
average yield close to 3%. Also, the income oriented holdings have
been changed significantly to increase the current yield and reduce
the potential volatility and economic risk. Convertibles were cut
back from over 25% of the Fund to under 10% while government and
corporate bonds were increased to over 26%.
CURRENT STRATEGY
o The economy has recently been growing faster than the perceived
speed limit for stable inflation. The advance to new highs for
stocks reflects an expected moderation in growth from the recent
fast pace.
o It seems likely that profit growth will slow soon or monetary
policy will become more restrictive. This makes the upside
potential for financial markets more limited but still positive in
our view. The Fund has been positioned more conservatively with
higher quality, and higher yielding holdings. We anticipate
opportunistically increasing the bond position a little more during
periods of volatility should they occur.
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/97) TOTAL NET ASSETS: $187,400,939
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 EQUITY HOLDINGS TOP 5 INDUSTRIES SEC AVERAGE ANNUAL RATES OF RETURN
NAME % FUND (by percentage of net assets) (at maximum applicable sales charge)
<S> <C> ----------------------------------------
1 General Electric Co. 5.7% U.S. Government 18.7% Inception 5 years 1 year
2 Minnesota, Mining & 5.1% ----------------------------------------
Manufacturing Co. Energy 17.6% Class A 8.52% n/a 8.10%
3 Philip Morris Cos., 5.1% ----------------------------------------
Inc. Financial 11..5% Class B 7.46% n/a 7.79%
4 Eastman Kodak Co. 4.7% ----------------------------------------
5 J.P. Morgan & Co. 3.7% Basic Materials 10.3% Class C 9.22% n/a 11.74%
6 Exxon Corp. 3.5% ----------------------------------------
7 Texaco, Inc. 3.5% Consumer Staples 8.5%
8 du Pont (E.I.) De 3.4% CUMULATIVE TOTAL RETURNS
Nemours & Co. (do not reflect sales charge)
9 Chevron Corp. 2.7% ----------------------------------------
10 Occidental Petroleum 2.5% Inception 5 years 1 year
Corp. ----------------------------------------
------ Class A 41.45% n/a 13.51%
39.9% ----------------------------------------
------ Class B 29.93% n/a 12.77%
------ ----------------------------------------
Class C 33.41% n/a 12.73%
----------------------------------------
</TABLE>
12
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS -- 61.26%
AEROSPACE & DEFENSE -- 1.16%
Boeing Co. 22,000 $ 2,169,750
------------
AUTOMOTIVE -- 4.79%
Chrysler Corp. 86,000 2,580,000
Ford Motor Co. 80,000 2,780,000
General Motors Corp. 62,500 3,617,188
------------
8,977,188
------------
CHEMICALS -- 3.40%
du Pont (E.I.) De Nemours & Co. 60,000 6,367,500
------------
CONSUMER PRODUCTS -- 7.31%
Kimberly-Clark Corp. 82,280 4,216,850
Minnesota, Mining & Manufacturing Co. 109,000 9,483,000
------------
13,699,850
------------
ELECTRICAL EQUIPMENT -- 5.69%
General Electric Co. 96,100 10,655,087
------------
FINANCE & BANKING -- 6.07%
Bankers Trust N.Y. Corp. 55,000 4,475,625
J.P. Morgan & Co., Inc. 67,700 6,896,937
------------
11,372,562
------------
FOREST & PAPER PRODUCTS -- 1.80%
International Paper Co. 80,000 3,380,000
------------
HEALTHCARE/PHARMACEUTICAL -- 4.48%
Bristol-Myers Squibb Co. 66,000 4,323,000
Merck & Co., Inc. 45,000 4,072,500
------------
8,395,500
------------
OIL & GAS -- 12.14%
Chevron Corp. 75,000 5,137,500
Exxon Corp. 114,400 6,477,900
Mobil Corp. 35,000 4,550,000
Texaco, Inc. 62,500 6,593,750
------------
22,759,150
------------
PHOTOGRAPHY -- 4.68%
Eastman Kodak Co. 105,000 8,767,500
------------
RETAILING -- 1.20%
Sears, Roebuck & Co. 47,000 2,256,000
------------
TELECOMMUNICATIONS -- 2.32%
AT & T Corp. 130,000 4,355,000
------------
TOBACCO -- 6.22%
Philip Morris Cos., Inc. 243,000 9,568,125
RJR Nabisco Holdings Corp. 70,000 2,082,500
------------
11,650,625
------------
TOTAL COMMON STOCKS
(cost $92,179,679) 114,805,712
------------
</TABLE>
13
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Shares/
Security Principal Amount Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
CONVERTIBLE PREFERRED STOCKS -- 6.69%
ENERGY -- 5.91%
MCN Energy Group, Inc., 8.75% 138,500 $ 3,687,563
NorAm Financing I, 6.25% 43,000 2,623,000
Occidental Petroleum Corp., $3.875 # 85,500 4,762,692
------------
11,073,255
------------
FINANCE & BANKING -- 0.78%
Finova Group, Inc., 5.50% 27,500 1,464,375
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $12,343,543) 12,537,630
------------
EXCHANGEABLE NOTES -- 0.94%
ENERGY -- 0.94%
Atlantic Richfield Corp.(1)
9.00%, Exchangeable Notes, 9/15/97 $86,000 1,763,000
------------
TOTAL EXCHANGEABLE NOTES
(cost $2,383,202) 1,763,000
------------
CORPORATE BONDS -- 7.30%
BANKING -- 1.93%
First Union Corp.
7.50%, Subordinated Notes, 7/15/06 3,600,000 3,616,560
------------
HEALTHCARE/PHARMACEUTICAL -- 0.95%
American Home Products Corp.
7.90%, Notes, 2/15/05 1,700,000 1,783,504
------------
INSURANCE -- 0.75%
Leucadia National Corp.
8.25%, Sr. Subordinated Notes, 6/15/05 1,375,000 1,403,779
------------
RETAILERS -- 1.62%
Penney (J.C.), Inc.
7.60%, Notes, 4/01/07 3,000,000 3,039,600
------------
TRANSPORTATION -- 2.05%
Continental Airlines, Inc.
7.82%, Pass-Thru Certificates, 4/15/15 3,774,510 3,842,073
------------
TOTAL CORPORATE BONDS
(cost $13,562,999) 13,685,516
------------
CONVERTIBLE BONDS -- 0.54%
REAL ESTATE INVESTMENT TRUST -- 0.54%
Meditrust
7.50%, Debentures, 3/01/01 940,000 1,006,392
------------
TOTAL CONVERTIBLE BONDS
(cost $933,220) 1,006,392
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 18.72%
6.50%, due 10/15/23 2,536,005 2,407,632
6.50%, due 2/15/26 21,869,773 20,623,634
U.S. Treasury Notes, 6.50% due 10/15/06 12,250,000 12,054,123
------------
35,085,389
------------
TOTAL U.S. GOVERNMENT AND AGENCIES
(cost $36,487,195) 35,085,389
------------
</TABLE>
14
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Principal Amount Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL INVESTMENT SECURITIES -- 95.45%
(cost $157,889,838) $178,883,639
REPURCHASE AGREEMENT -- 4.45%
Agreement with State Street Bank and Trust bearing
interest at 5.20% dated 4/30/97 to be repurchased 5/01/97
at $8,335,204 and collateralized by $8,490,000 U.S.
Treasury Notes, 5.125% due 2/28/98, value $8,502,429
(cost $8,334,000) $8,334,000 8,334,000
OTHER ASSETS LESS LIABILITIES -- 0.10% 183,300
------------
NET ASSETS -- 100.00% $187,400,939
------------
------------
</TABLE>
# Sales to Qualified Institutional Investors.
(1) Mandatory conversion on 9/15/97 into shares of Lyondell Petrochemical Co.
common stock.
<TABLE>
<CAPTION>
% of Fund
Industry $ Value Portfolio
- ---------------------------------------------------------------------------------
<S> <C>
Aerospace & Defense $ 2,169,750 1.15%
Automotive 8,977,188 4.79
Chemicals 6,367,500 3.40
Consumer Products 13,699,850 7.31
Electrical Equipment 10,655,087 5.69
Energy 12,836,255 6.85
Finance & Banking 16,453,497 8.78
Forest & Paper Products 3,380,000 1.80
Healthcare/Pharmaceuticals 10,179,004 5.43
Insurance 1,403,779 0.75
Oil & Gas 22,759,150 12.14
Photography 8,767,500 4.68
Real Estate Investment Trust 1,006,392 0.54
Retail 5,295,600 2.83
Telecommunications 4,355,000 2.32
Tobacco 11,650,625 6.22
Transportation 3,842,073 2.05
U.S. Government & Agencies 35,085,389 18.72
Repurchase Agreement 8,334,000 4.45
Other assets less liabilities 183,300 0.10
------------ ---------
NET ASSETS $187,400,939 100.00%
------------ ---------
------------ ---------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
[PICTURE]
THOMAS OLE DIAL
NORTHSTAR HIGH TOTAL RETURN FUND
THE MARKETS
o Inflation remained below 3.0% from Oct. 1996 to April 1997, but GDP
growth was well above 2.5%. That caused yields on both 10-year and
30-year Treasury bonds to be volatile and to rise during that
period. As a result, in March, 1997 the Fed increased the rate for
fed funds by 0.3% to 5.5% to preempt higher inflation. Despite all
of that, 10-yr. rates rose only 38 basis points (bps) to 6.7% , and
30-yr. rates rose 30 bps to 7.0%. Emerging markets issues
outperformed high yield, which had better returns than investment
grade or treasury bonds. High yield bonds were held back by the
relative underperformance of small cap stocks.
o High growth and low inflation caused bond spreads over treasuries
to decline to near historical lows during most of the period from
Oct. through April, while stock indices reached all-time highs in
Jan. and Feb. 1997. However, Alan Greenspan's questioning of the
rationality of stock prices, rising interest rates and the large
number of new deals coming to market finally made stocks and bonds
suffer a major correction. The correction was confined mainly to
the month of March 1997, and the recovery of stock and bond prices
was well under way by the end of April. The outlook for domestic
stocks and bonds is now again positive for the rest of 1997.
THE FUND
o We closed the fund to new investors to preserve the unrealized
upside of the Fund for its existing investors. From Oct. 31, 1996
to April 30,1997, the total return of the Fund's Class A, B, and C
shares was 1.9%, 1.6%, and 1.6%, respectively; the Lipper average
was 4.7%. The portfolio's outstanding long-term record and the
decision to close the fund promoted sales that led to a 43.1%
increase in its net assets, which rose from $569MM to $814MM in the
last six months.
o The Fund's performance was held-back by the lower yet still heavy
weighting of telecommunication issues in the portfolio.
Telecommunication bond prices were weakened by new issuances and
lower prices for related stocks. Large holdings of zero-coupon
bonds, wireless cable bonds and small-cap preferred stocks also
limited the Fund's relative performance. We further reduced
cyclical holdings while we bought more cable and aerospace bonds.
o Stocks or equity rights attached to bonds ("equity kickers") held
by the Fund did not rise along with big cap stocks. Several of our
equity kickers which we still think have solid long-term prospects
unexpectedly sold off sharply due to setbacks in rolling out new
services (e.g. CAI Wireless, EchoStar, Geotek, and Heartland).
CURRENT STRATEGY
o Continue above-average exposure in non-cyclical industries and in
bonds that have equity kickers.
o Continue to sell securities which reach our price/spread targets.
Focus on spreads among individual securities with different risk
profiles/ratings and invest in securities with the best relative
values.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/97) TOTAL NET ASSETS: $814,280,719
- --------------------------------------------------------------------------------
<S> <C>
TOP 10 HOLDINGS TOP 5 INDUSTRIES SEC AVERAGE ANNUAL RATES OF RETURN
NAME % FUND by percentage of net asset) (at maximum applicable sales charge)
-----------------------------------------
1 Panda Global Energy Co. 1.9% Telecommunications 16.8% Inception 5 years 1 year
2 Anacomp, Inc. 1.8% -----------------------------------------
3 EchoStar Satellite Cable 12.3% Class A 6.76% n/a 2.48%
Broadcasting Corp. 1.8% -----------------------------------------
4 Occidente Y Caribe Cellular SA 1.8% Services 8.0% Class B 5.71% n/a 2.22%
5 Packaged Ice, Inc. 1.8% -----------------------------------------
6 TCI Communications Financing 1.8% Broadcasting 5.6% Class C 7.16% n/a 6.12%
7 Dial Call Communications, Inc. 1.7% -----------------------------------------
8 Trump Atlantic City Funding, Inc. 1.7% Energy 3.2%
9 Chancellor Radio Broadcasting 1.5% CUMULATIVE TOTAL RETURNS
10 Sheffield Steel Corp. 1.5% (do not reflect sales charge)
------ -----------------------------------------
17.3% Inception 5 years 1 year
------ -----------------------------------------
------ Class A 31.84% n/a 7.65%
-----------------------------------------
Class B 21.36% n/a 7.10%
-----------------------------------------
Class C 23.99% n/a 7.10%
-----------------------------------------
</TABLE>
16
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Principal
Security Amount Value
- --------------------------------------------------------------------------------------------------------------
<S> <C>
DOMESTIC BONDS & NOTES -- 54.26%
AEROSPACE & DEFENSE -- 1.95%
Remington Arms Co. #
10.00%, Sr. Subordinated Notes, 12/01/03 $ 7,000,000 $ 5,705,000
Wilcox + Gibbs, Inc. #
12.25%, Sr. Notes, 12/15/03 10,096,000 10,146,480
------------
15,851,480
------------
BANKS -- 0.72%
First Nationwide Bank, FSB #
10.625%, Sr. Subordinated Notes, 10/01/03 4,000,000 4,240,000
First Nationwide Parent Holdings
12.50%, Sr. Notes, 4/15/03 1,500,000 1,657,500
------------
5,897,500
------------
BROADCASTING & MEDIA -- 1.86%
Allbritton Communications Co.
9.75%, Sr. Subordinated Debentures, 11/30/07 4,500,000 4,297,500
SFX Broadcasting, Inc.
10.75%, Sr. Subordinated Notes, 5/15/06 7,500,000 7,875,000
Tevecap SA
12.625%, Sr. Notes, 11/26/04 3,000,000 3,015,000
------------
15,187,500
------------
CABLE -- 7.15%
Adelphia Communications Corp.
12.50%, Sr. Notes, 5/15/02 5,900,000 6,195,000
Adelphia Communications Corp. #
9.875%, Sr. Notes, 3/01/07 4,000,000 3,780,000
CAI Wireless Systems, Inc.
12.25%, Sr. Notes, 9/15/02 7,500,000 2,887,500
EchoStar Satellite Broadcasting Corp. $
0/13.125%, Sr. Discount Notes, 3/15/04 19,993,000 14,594,890
Heartland Wireless Communications, Inc.
13.00%, Sr. Notes, 4/15/03 10,300,000 3,862,500
Heartland Wireless Communications, Inc.
14.00%, Sr. Notes, 10/15/04 7,000,000 3,045,000
Source Media, Inc.
13.00%, Sr. Secured Notes, 3/31/02 5,676,895 4,839,553
Source Media, Inc.
13.00%, Sr. Secured Notes, 3/31/02 5,000,000 4,262,500
TCI Communications Financing III
9.65%, Company Guarantee, 3/31/27 14,896,000 14,780,854
------------
58,247,797
------------
CAPITAL GOODS -- 0.58%
Unisys Corp.
11.75%, Sr. Notes, 10/15/04 4,500,000 4,741,875
------------
</TABLE>
17
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Principal
Security Amount/Units Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
CHEMICALS -- 2.51%
Jordan Industries, Inc.
10.375%, Sr. Notes, 8/01/03 $ 8,001,000 $ 7,920,990
Jordan Industries, Inc. # $
0/11.75%, Sr. Subordinated Discount Notes, 8/01/09 12,865,000 7,333,050
Sterling Chemicals, Inc. #
11.25%, Sr. Subordinated Notes, 4/01/07 4,997,000 5,171,895
------------
20,425,935
------------
CONTAINERS AND PACKAGING -- 2.64%
Packaged Ice, Inc. (1)
12.00%, Units, 4/15/04 14,350 14,421,750
Packaging Resources Inc. #
13.00%, Sr. Notes, 6/30/03 7,784,313 7,044,804
------------
21,466,554
------------
ENERGY -- 1.29%
CalEnergy Co., Inc.
9.50%, Sr. Notes, 9/15/06 10,000,000 10,475,000
------------
FINANCIAL SERVICES -- 1.77%
Central Rents, Inc.
12.875%, Sr. Notes, 12/15/03 10,550,000 10,655,500
Ocwen Financial Corp.
11.875%, Notes, 10/01/03 3,550,000 3,789,625
------------
14,445,125
------------
FOOD & BEVERAGE -- 1.00%
Di Giorgio Corp.
12.00%, Sr. Notes, 2/15/03 2,000,000 2,110,000
Gorges Quik To Fix Foods, Inc. #
11.50%, Sr. Subordinated Notes, 12/01/06 4,500,000 4,578,750
Specialty Foods Corp.
10.25%, Sr. Notes, 8/15/01 1,500,000 1,466,250
------------
8,155,000
------------
HEALTHCARE -- 1.95%
Intracel Corp.
9.00%, Sr. Notes, 12/31/00 6,660,061 5,694,352
Unison Healthcare Corp. #
12.25%, Company Guarantee, 11/01/06 5,000,000 4,225,000
Urohealth Systems, Inc. # (2)
12.50%, Units, 4/01/04 5,896 5,984,440
------------
15,903,792
------------
HOMEBUILDERS/HOME CONSTRUCTION -- 0.51%
Hovnanian K Enterprises, Inc.
11.25%, Subordinated Notes, 4/15/02 4,000,000 4,120,000
------------
</TABLE>
18
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Principal
Security Amount/Units Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
HOTEL & GAMING -- 2.81%
Aztar Corp.
13.75%, Sr. Subordinated Notes, 10/01/04 $ 5,000,000 $ 5,681,250
Courtyard By Marriott Ltd.
10.75%, Sr. Secured Notes, 2/01/08 3,000,000 3,157,500
Trump Atlantic City Funding, Inc.
11.25%, Company Guarantee, 5/01/06 14,400,000 14,040,000
------------
22,878,750
------------
INSURANCE -- 1.81%
Americo Life, Inc.
9.25%, Sr. Subordinated Notes, 6/01/05 6,000,000 5,970,000
Integon Capital I #
10.75%, Company Guarantee, 2/15/27 10,000,000 8,800,000
------------
14,770,000
------------
OIL & GAS -- 2.95%
Clark U.S.A., Inc.
10.875%, Sr. Notes, 12/01/05 8,000,000 8,150,000
Crown Central Petroleum Corp.
10.875%, Sr. Notes, 2/01/05 10,121,000 10,310,769
Trans Texas Gas Corp.
11.50%, Sr. Secured Notes, 6/15/02 5,000,000 5,575,000
------------
24,035,769
------------
SERVICES -- 7.15%
Allied Waste North America, Inc. #
10.25%, Sr. Subordinated Notes, 12/01/06 3,000,000 3,172,500
Anacomp, Inc. #
10.875%, Sr. Subordinated Notes, 4/01/04 15,000,000 14,831,250
Coinstar, Inc. # $ (3)
0/13.00%, Units, 10/01/06 8,700 6,394,500
ICF Kaiser International, Inc. #
13.00%, Sr. Subordinated Notes, 12/31/03 3,500,000 3,670,625
ICF Kaiser International, Inc. # $ (4)
0/13.00%, Units, 12/31/03 11,254 10,958,583
Kindercare Learning Centers, Inc. #
9.50%, Sr. Subordinated Notes, 2/15/09 2,500,000 2,375,000
La Petite Holdings
9.625%, Sr. Secured Notes, 8/01/01 4,800,000 4,932,000
Unifi Communications Inc. # (5)
14.00%, Units, 3/01/04 11,795 11,853,975
------------
58,188,433
------------
SPECIALTY RETAILING -- 1.42%
Electronic Retailing Systems International # $ (6)
0/13.25%, Units, 2/01/04 17,000 11,560,000
------------
STEEL -- 1.47%
Sheffield Steel Corp.
12.00%, 1st Mortgage Notes, 11/01/01 12,700,000 11,938,000
------------
</TABLE>
19
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Principal
Security Amount/Units Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
SUPERMARKETS -- 2.14%
Dairy Mart Convenience Stores, Inc.
10.25%, Sr. Subordinated Notes, 3/15/04 $ 7,795,000 $ 7,600,125
Food 4 Less Supermarkets, Inc. &
0/13.625%, Sr. Subordinated Debentures, 6/15/07 8,796,409 9,807,996
------------
17,408,121
------------
TELECOMMUNICATIONS -- 10.08%
CS Wireless Systems Inc. $
0/11.375%, Sr. Discount Notes, 3/01/06 12,000,000 3,300,000
Dial Call Communications, Inc. $
0/12.25%, Sr. Discount Notes, 4/15/04 17,500,000 13,781,250
Geotek Communications, Inc. $
0/15.00%, Sr. Discount Notes, 7/15/05 10,900,000 6,485,500
Globalstar L.P./Globalstar Capital # (7)
11.375%, Units, 2/15/04 4,495 4,455,669
GST U.S.A., Inc. $
0/13.875%, Company Guarantee, 12/15/05 4,975,000 2,985,000
Hyperion Telecommunications, Inc. # $
0/13.00%, Sr. Discount Notes, 4/15/03 10,200,000 5,431,500
ICG Holdings, Inc. $
0/13.50%, Sr. Discount Notes, 9/15/05 7,000,000 4,763,150
International Wireless Communications
0%, Sr. Discount Notes, 8/15/01 6,000,000 3,345,000
L 3 Communications Corp. #
10.375%, Sr. Subordinated Notes, 5/01/07 2,000,000 2,070,000
Nextlink Communications, Inc.
12.50%, Sr. Notes, 4/15/06 6,000,000 6,150,000
Paging Network, Inc.
10.00%, Sr. Subordinated Notes, 10/15/08 5,900,000 5,310,000
SA Telecommunications, Inc.
10.00%, Sr. Debentures, 8/15/06 3,800,000 3,173,000
Winstar Communications, Inc. $
0/14.00%, Sr. Discount Notes, 10/15/05 15,000,000 8,325,000
Winstar Equipment Corp. #
12.50%, Sr. Secured Notes, 3/15/04 8,197,000 7,889,612
Wireless One, Inc.
13.00%, Sr. Notes, 10/15/03 7,000,000 4,620,000
------------
82,084,681
------------
TRANSPORTATION -- 0.50%
Ameritruck Distribution Corp.
12.25%, Sr. Subordinated Notes, 11/15/05 4,000,000 4,080,000
------------
TOTAL DOMESTIC BONDS & NOTES
(cost $464,339,836) 441,861,312
------------
FOREIGN BONDS & NOTES -- 20.75%
BUILDING MATERIALS -- 0.68%
Cemex SA #
12.75%, Guarantee Notes, 7/15/06 5,000,000 5,581,250
------------
</TABLE>
20
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Principal
Security Amount/Units Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
CABLE -- 4.11%
Australis Media Ltd. $ (8)
14.00%/15.75%, Units, 5/15/03 2,000 $ 1,260,000
Innova S De R.L. #
12.875%, Sr. Notes, 4/01/07 $ 8,900,000 8,811,000
Multicanal Participacoes SA
12.625%, Company Guarantee, 6/18/04 11,875,000 13,092,187
Rogers Cablesystems Ltd.
10.125%, Sr. Secured Debentures, 9/01/12 10,000,000 10,275,000
------------
33,438,187
------------
CAPITAL GOODS -- 0.25%
Celestica International, Inc. #
10.50%, Sr. Subordinated Notes, 12/31/06 1,900,000 2,018,750
------------
CHEMICALS -- 0.49%
Acetex Corp.
9.75%, Sr. Secured Notes, 10/01/03 4,000,000 3,960,000
------------
CONSUMER PRODUCTS -- 1.22%
International Semi-Tech Corp. $
0/11.50%, Sr. Discount Notes, 8/15/03 17,900,000 9,979,250
------------
ENERGY -- 1.88%
Panda Global Energy Co. #
12.50%, Sr. Secured Notes, 4/15/04 16,000,000 15,280,000
------------
ENTERTAINMENT -- 0.85%
Globo Comunicacoes E Participacoes Ltda. #
10.50%, Company Guarantee, 12/20/06 1,800,000 1,836,000
TV Filme Inc. #
12.875%, Sr. Notes, 12/15/04 5,000,000 5,100,000
------------
6,936,000
------------
METALS & MINING -- 1.33%
Royal Oaks Mines, Inc.
11.00%, Company Guarantee, 8/15/06 2,000,000 1,990,000
Westmin Resources Ltd.
11.00%, Sr. Secured Notes, 3/15/07 8,795,000 8,816,988
------------
10,806,988
------------
PAPER -- 2.77%
APP International Finance Co.
11.75%, Company Guarantee, 10/01/05 8,055,000 8,538,300
Grupo Industrial Durango SA
12.00%, Sr. Notes, 7/15/01 6,250,000 6,718,750
Indah Kiat International Finance
12.50%, Guaranteed Notes, 6/15/06 2,500,000 2,746,875
Malette, Inc.
12.25%, Sr. Notes, 7/15/04 2,000,000 2,215,000
Uniforet Inc. #
11.125%, Company Guarantee, 10/15/06 2,500,000 2,312,500
------------
22,531,425
------------
</TABLE>
21
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Principal
Amount/
Security Shares/Units Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
PRINTING & PUBLISHING -- 0.63%
Sea Containers Ltd.
10.50%, Sr. Notes, 7/01/03 $ 5,000,000 $ 5,175,000
------------
STEEL -- 0.50%
Altos Hornos De Mexicos SA #
11.875%, Notes, 4/30/04 4,000,000 4,060,000
------------
TELECOMMUNICATIONS -- 4.20%
CEI Citicorp Holdings SA #
9.75%, Notes, 2/14/07 2,995,000 2,942,587
Colt Telecom Group PLC $ (9)
0/12.00%, Units, 12/15/06 3,200 1,856,000
Ionica PLC $ (10)
0/15.00%, Units, 5/01/07 18,000 8,730,000
Occidente Y Caribe Celular SA $
14.00%, Sr. Discount Notes, 3/15/04 23,011,000 14,842,095
Petersburg Long Distance, Inc. # $ (11)
0/14.00%, Units, 6/01/04 7,000 5,862,500
------------
34,233,182
------------
UTILITIES -- 1.84%
CE Casecnan Water & Energy Co.
11.95%, Sr. Notes, 11/15/10 8,800,000 9,570,000
Invergas SA
12.50%, Sr. Notes, 12/16/99 4,925,000 5,411,344
------------
14,981,344
------------
TOTAL FOREIGN BONDS & NOTES
(cost $163,823,522) 168,981,376
------------
CONVERTIBLE BONDS -- 2.28%
AEROSPACE & DEFENSE -- 1.09%
Simula, Inc.
8.00%, Sr. Notes, 5/01/04 4,496,000 4,518,480
Simula, Inc.
10.00%, Sr. Subordinated Notes, 9/15/99 4,250,000 4,377,500
------------
8,895,980
------------
TELECOMMUNICATIONS -- 1.19%
GST Telecommunciations Inc. # $
0/13.875%, Sr. Discount Notes, 12/15/05 650,000 437,125
SA Telecommunications, Inc. #
10.00%, Subordinated Notes, 8/15/06 8,500,000 7,097,500
Winstar Communications, Inc. # $
0/14.00%, Sr. Discount Notes, 10/15/05 3,500,000 2,108,750
------------
9,643,375
------------
TOTAL CONVERTIBLE BONDS
(cost $19,854,387) 18,539,355
------------
COMMON STOCKS -- 0.17%
BROADCASTING & MEDIA -- 0.01%
Pegasus Communications Corp. @ 9,928 103,006
------------
</TABLE>
22
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------------------------------------
<S> <C>
CABLE -- 0.08%
Echostar Communications Corp. @ 40,050 $ 605,757
------------
FINANCIAL SERVICES -- 0.05%
Central Rents, Inc. @ 7,150 432,576
------------
PRINTING & PUBLISHING -- 0.03%
Affiliated Newspapers Investments, Inc. @ 2,500 201,250
------------
TELECOMMUNICATIONS -- 0.00%
CS Wireless Systems, Inc. # @ 3,300 0
------------
TOTAL COMMON STOCKS
(cost $392,572) 1,342,589
------------
CONVERTIBLE PREFERRED STOCKS -- 0.41%
HEALTHCARE -- 0.41%
Intracel Corp., 8.00% 221,354 3,320,310
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $1,801,806) 3,320,310
------------
PREFERRED STOCKS -- 9.01%
BROADCASTING & MEDIA -- 3.57%
Chancellor Radio Broadcasting, 12.00% # 120,000 11,940,000
Paxson Communications Corp., 12.50% & 80,368 7,755,512
SFX Broadcasting, Inc., 12.625% & 94,000 9,400,000
------------
29,095,512
------------
CABLE -- 0.82%
Cablevision Systems Corp., 11.75% & 70,004 6,685,382
------------
CAPITAL GOODS -- 0.05%
Telos Corp. of Maryland, 12.00% 129,687 389,061
------------
CONSUMER PRODUCTS -- 1.23%
Commemorative Brands, Inc., 12.00% 100,000 10,025,000
------------
FINANCIAL SERVICES -- 0.59%
California Federal Preferred Capital Corp., 9.125% 192,000 4,824,000
------------
HEALTHCARE -- 0.50%
Intracel Corp., 10.00% 40,000 4,020,000
------------
PAPER -- 0.22%
APP Finance II Mauritius Ltd., 12.00% # 1,900,000 1,795,500
------------
SERVICES -- 0.89%
La Petite Holdings, 12.125% 174,200 7,229,300
------------
SPECIALTY RETAILING -- 0.00%
Color Tile, Inc., 13.00% * 20,000 0
------------
TELECOMMUNICATIONS -- 1.14%
Nextlink Communications, Inc., 14.00% # & 140,000 6,650,000
Sygnet Wireless, Inc., 0/21.00% $ & 26,230 2,636,093
------------
9,286,093
------------
TOTAL PREFERRED STOCKS
(cost $73,836,004) 73,349,848
------------
WARRANTS -- 0.63%
AIRLINES -- 0.00%
CHC Helicopter Corp., (expires 12/15/00) 2,000 1,000
------------
</TABLE>
23
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Shares Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
BROADCASTING & MEDIA -- 0.13%
Benedek Communications Corp., (expires 7/01/07) 44,000 $ 99,000
Spanish Broadcasting Corp., (expires 6/30/99) 5,000 1,000,000
------------
1,099,000
------------
CABLE -- 0.18%
American Telecasting, Inc., (expires 8/10/00) 4,000 12,000
Heartland Wireless Communications, Inc., (expires 4/15/00) 46,402 11,601
Source Media, Inc., (expires 3/31/04) 1,250,000 1,406,250
------------
1,429,851
------------
CONSUMER PRODUCTS -- 0.00%
Chattem, Inc., (expires 6/17/99) 1,300 26,325
Commemorative Brands, Inc., (expires 12/16/97) 19,820 198
------------
26,523
------------
HEALTHCARE -- 0.05%
Intracel Corp., (expires 12/28/00) 173,547 368,787
------------
PAPER -- 0.05%
SD Warren Holdings Corp., (expires 12/15/06) 80,000 400,000
------------
SERVICES -- 0.00%
ICF Kaiser International, Inc., (expires 12/31/99) 24,500 245
Sabreliner Corp., (expires 4/15/03) 2,450 12,250
------------
12,495
------------
STEEL -- 0.05%
Bar Technologies, Inc., (expires 4/01/01) 7,000 350,000
Gulf States Steel, Inc., (expires 4/15/03) 5,010 22,545
Sheffield Steel Corp., (expires 11/01/01) 12,500 37,500
------------
410,045
------------
SUPERMARKETS -- 0.01%
Dairy Mart Convenience Stores, Inc., (expires 12/01/01) 23,632 53,172
------------
TELECOMMUNICATIONS -- 0.16%
American Communications Services, Inc., (expires 11/01/05) 14,500 507,500
Applied Voice Technology, Inc., (expires 1/03/02) 31,958 0
Cellular Communications International, Inc., (expires 8/15/03) 6,250 62,500
Clearnet Communications, Inc., (expires 9/15/05) 38,280 133,980
Geotek Communications, Inc., (expires 6/20/01) 177,000 265,500
Hyperion Telecommunications, Inc., (expires 4/15/01) 10,200 306,000
Intelcom Group, Inc. B C, (expires 9/15/05) 6,600 59,400
International Wireless Communications Holdings Inc., (expires
8/15/01) 6,000 60
Occidente Y Caribe Celular SA, (expires 3/15/04) 92,044 920
Wireless One, Inc., (expires 10/19/00) 1,500 0
------------
1,335,860
------------
TOTAL WARRANTS
(cost $2,936,074) 5,136,733
------------
TOTAL INVESTMENT SECURITIES -- 87.51% (cost $726,984,201) 712,531,523
------------
</TABLE>
24
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Security Principal Amount Value
- --------------------------------------------------------------------------------------------------------------
<S> <C>
REPURCHASE AGREEMENT -- 11.53%
Agreement with State Street Bank and Trust bearing interest at
5.20% dated 4/30/97, to be repurchased 5/01/97 in the amount of
$93,924,565 and collateralized by $94,535,000 U.S. Treasury
Bonds, 7.125% due 2/15/23, value $95,793,734
(cost $93,911,000) $ 93,911,000 $ 93,911,000
OTHER ASSETS LESS LIABILITIES -- 0.96% 7,838,196
------------
NET ASSETS -- 100.00% $814,280,719
------------
------------
</TABLE>
# Sale restricted to qualified institutional investors.
$ Step Bond.
& Payment-in-kind security.
@ Non-income producing security.
* Bankrupt security.
1) A unit consists of $1,000 par value Sr. Notes, 12.00% due 4/15/04, and 1
warrant.
2) A unit consists of $1,000 par value Sr. Subordinated Notes, 12.50% due
4/01/04, and 1 warrant.
3) A unit consists 0f $1,000 par value Sr. Subordinated Discount Notes, 13.00%
due 10/01/06, and 1 warrant.
4) A unit consists of $1,000 par value Sr. Subordinated Notes, 13.00% due
12/31/03, and 4.8 warrants.
5) A unit consists of $1,000 par value Sr. Notes, 14.00% due 3/01/04, and 1
warrant.
6) A unit consists of $1,000 par value Sr. Discount Notes, 13.25% due 2/01/04,
and 1 warrant.
7) A unit consists of $1,000 par value Sr. Notes, 11.375% due 2/15/04, and 1
warrant.
8) A unit consists of $1,000 par value Sr. Subordinated Discount Notes, 15.75%
due 5/15/03, and 1 warrant.
9) A unit consists of $1,000 par value Sr. Discount Notes, 12.00% due 12/15/06,
and 1 warrant.
10) A unit consists of $1,000 par value Sr. Discount Notes, 15.00% due 5/01/07,
and 1 warrant.
11) A unit consists of $1,000 par value Sr. Discount Notes, 14.00% due 6/01/04,
and 1 warrant.
See accompanying notes to financial statements.
25
<PAGE>
NORTHSTAR HIGH TOTAL RETURN II FUND
THE MARKETS
o Inflation remained below 3% from Oct. 1996 through April 1997, but GDP growth
was well above 2.5%. This caused yields on both 10-year and 30-year Treasury
bonds to be volatile and to rise during that period. As a result, in March,
1997 the Fed increased the rate for fed funds by 0.25% to 5.5% to preempt
higher inflation. Despite all of that, 10-yr. rates rose only 38 basis points
(bps) to 6.72% , and 30-yr. rates rose 30 bps to 6.96%. Emerging markets
issues outperformed high yield, which had better returns than investment
grade or treasury bonds. High yield bonds were held back by the relative
underperformance of small cap stocks.
o High growth and low inflation caused bond spreads over treasuries to decline
to near historical lows during most of the period from Oct. through April,
while stock indices reached all-time highs in Jan. and Feb. 1997. However,
Alan Greenspan's questioning of the rationality of stock prices, rising
interest rates and the large number of new deals coming to market finally
made stocks and bonds suffer a major correction. The correction was confined
mainly to the month of March 1997, and the recovery of stock and bond prices
was well under way by the end of April. The outlook for domestic stocks and
bonds is now again positive for the rest of 1997.
THE FUND
o We opened this Fund with $100,000 on 1/31/97 after deciding to close High
Total Return to new investors to preserve the unrealized upside of that Fund
for its existing investors. From Jan. 31, 1997 to April 30,1997, the total
return of the Fund's Class A shares was -0.54% (the Lipper average was
0.47%), so its net assets have fallen slightly.
o Since the fund will remain small until the initiation of marketing efforts,
changes in a few securities can have a major impact on the Fund's
performance. Two investments, Heartland and EchoStar, largely account for the
small negative return between January and April.
o Stocks or equity rights attached to bonds ("equity kickers") did not
significantly hurt this Fund despite the relative weakness of small cap
stocks during this period.
CURRENT STRATEGY
o Continue above-average exposure in non-cyclical industries and add bonds that
have equity kickers.
o Continue to buy securities that meet our risk/reward parameters. Focus on
spreads among individual securities with different risk profiles/ratings and
invest in securities with the best relative values.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Fund Information (All data are as of 4/30/97) Total Net Assets $99,550
- ----------------------------------------------------------------------------------------------------------------------
Top 10 Holdings Top 5 Industries SEC Average Annual Rates of Return
Name % Fund (by percentage of net asset) (at maximum applicable sales charge)
<S> <C>
1 EchoStar Satellite Broadcasting 5.1% Telecommunications 22.2% Inception
2 Globalstar LP/ Globalstar Capital 5.0% Class A (5.27%)
3 MBW Foods, Inc. 5.0% Cable 13.9% Class B (5.62%)
4 Packaged Ice, Inc. 5.0% Class C (1.69%)
5 Unifi Communications, Inc. 5.0% Oil & Gas 8.2% Cumulative Total Returns
6 Westmin Resources Ltd. 5.0% (do not reflect sales charge)
7 CEI Citicorp Holdings SA 4.9% Aerospace/Defense 8.1% Inception
8 Ionica PLC 4.9% Class A (0.54%)
9 Occidente Y Caribe Celular SA 4.5% Food 8.0% Class B (0.71%)
10 Clark U.S.A., Inc. 4.1% Class C (0.71%)
-----
48.5%
-----
</TABLE>
<PAGE>
NORTHSTAR HIGH TOTAL RETURN II FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
Principal Amount/
Security Units Value
DOMESTIC CORPORATE BONDS & NOTES - 68.93%
AEROSPACE - 3.96%
Sabreliner Corp.
12.50%, Sr. Notes, 4/15/03 $4,000 $3,940
AEROSPACE/DEFENSE - 4.04%
Wilcox + Gibbs, Inc.
12.25%, Sr. Notes, 12/15/03 # 4,000 4,020
CABLE - 10.87%
EchoStar Satellite Broadcasting Corp.
0/13.125%, Sr. Discount Notes, 3/15/04 $ 7,000 5,110
Heartland Wireless Communications, Inc.
14.00%, Sr. Notes, 10/15/04 4,000 1,740
TCI Communications Financing III
9.65%, Company Guarantee Notes, 3/31/27 4,000 3,969
10,819
CHEMICAL - 7.09%
Jordan Industries, Inc.
10.375%, Sr. Notes, 8/01/03 $ 4,000 3,960
Sterling Chemicals, Inc.
11.25%, Sr. Subordinated Notes, 4/01/07 # 3,000 3,105
7,065
CONTAINERS AND PACKAGING - 5.05%
Packaged Ice, Inc.
12.00%, Units, 4/15/04 (1) 5 5,025
FOOD - 5.00%
MBW Foods, Inc.
9.875%, Sr. Subordinated Notes, 2/15/07 # 5,000 4,975
HEALTHCARE - 8.03%
Packard Bioscience Co.
9.375%, Sr. Subordinated Notes, 3/01/07 # 4,000 3,940
Urohealth Systems, Inc.
12.50%, Units, 4/01/04 # (2) 4 4,060
8,000
OIL & GAS - 8.18%
Clark U.S.A., Inc.
10.875%, Sr. Notes, 12/01/05 4,000 4,075
Crown Central Petroleum Corp.
10.875%, Sr. Notes, 2/01/05 4,000 4,075
8,150
SERVICES - 5.05%
Unifi Communications, Inc.
14.00%, Units, 3/01/04 # (3) 5 5,025
<PAGE>
NORTHSTAR HIGH TOTAL RETURN II FUND
PORTFOLIO OF INVESTEMENTS (UNAUDITED)
APRIL 30, 1997
Principal Amount/
Security Units Value
STEEL - 3.78%
Sheffield Steel Corp.
12.00%, 1St. Mortgage Notes, 11/01/01 $4,000 $3,760
TELECOMMUNICATIONS - 7.88%
Globalstar LP/Globalstar Capital
11.375%, Units, 2/15/04 # (4) 5 4,956
Winstar Equipment Corp.
12.50%, Sr. Secured Notes, 3/15/04 # 3,000 2,888
7,844
TOTAL DOMESTIC CORPORATE BONDS & NOTES
(cost $71,014) 68,623
FOREIGN BONDS & NOTES - 22.36%
CABLE - 2.98%
Innova S De R.L.
12.875%, Sr. Notes, 4/01/07 # 3,000 2,970
METALS & MINING - 5.04%
Westmin Resources, Ltd.
11.00%, Sr. Secured Notes, 3/15/07 5,000 5,012
TELECOMMUNICATIONS - 14.34%
CEI Citicorp Holdings SA
0/9.750%, Notes, 2/14/07 $ # 5,000 4,913
Ionica PLC
0/15.00%, Units, 5/01/07 $ (5) 10 4,850
Occidente Y Caribe Celular SA
0/14.00%, Sr. Discount Notes, 3/15/04 $ 7,000 4,515
14,278
TOTAL FOREIGN BONDS & NOTES
(cost $22,387) 22,260
CONVERTIBLE BONDS - 4.04%
AEROSPACE/DEFENSE - 4.04%
Simula, Inc.
8.00%, Sr. Subordinated Notes, 5/01/04 4,000 4,020
TOTAL CONVERTIBLE BONDS
(cost $4,000) 4,020
<PAGE>
NORTHSTAR HIGH TOTAL RETURN II FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
Shares Value
Security
DOMESTIC WARRANTS - 2.51% @
AIRLINES - 2.51%
CHC Helicopter Corp. (expires 12/15/00) 5,000 $2,500
TOTAL DOMESTIC WARRANTS
(cost $2,500) 2,500
FOREIGN WARRANTS - 0% @
TELECOMMUNICATIONS - 0%
Occidente Y Caribe Celular SA (expires 3/15/04) 28 0
TOTAL FOREIGN WARRANTS
(cost $0) 0
TOTAL INVESTMENTS SECURITIES - 97.84%
(cost $99,901) 97,403
OTHER ASSETS LESS LIABILITIES - 2.16% 2,147
NET ASSETS - 100.00% $99,550
# Sale restricted to qualified institutional investors.
$ Step bond.
@ Non-income producing security.
(1) A unit consists of $1,000 par value 12.00%, Sr. Notes, 4/15/04 and 1
warrant.
(2) A unit consists of $1,000 par value 12.50%, Sr. Subordinated Notes, 4/01/04
and 1 warrant.
(3) A unit consists of $1,000 par value 14.00%, Sr. Notes, 3/01/04 and 1
warrant.
(4) A unit consists of $1,000 par value 11.375%, Sr. Notes, 2/15/04 and 1
warrant.
(5) A unit consists of $1,000 par value 15.00%, Sr. Discount Notes, 5/01/07 and
1 warrant.
See accompanying notes to financial statements.
<PAGE>
NORTHSTAR TRUST
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD JANUARY 31, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH APRIL 30, 1997
Northstar
High Total
Return II Fund
INVESTMENT INCOME:
Interest.................................................. $1,856
Total investment income................................... 1,856
EXPENSES:
Investment advisory and management fees................... 177
Distribution fees:
Class A................................................... 70
Class B................................................... 3
Class C................................................... 3
Transfer agent fees and expenses:
Class A................................................... 35
Administrative services fees.............................. 24
Custodian fees and expenses............................... 2,467
Printing and postage expenses............................. 959
Registration fees......................................... 596
Legal expenses............................................ 493
Audit expenses............................................ 9
Trustee expenses.......................................... 7
Miscellaneous expenses.................................... 3
4,846
Less expenses reimbursed by management company 4,485
Total expenses....................... 361
Net investment income..................................... 1,495
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.......................... 553
Net change in unrealized depreciation of investments...... (2,498)
Net realized and unrealized loss on investments........... (1,945)
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... ($450)
See accompanying notes to financial statements.
<PAGE>
NORTHSTAR TRUST
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Northstar
High Total
ASSETS: Return II Fund
<S> <C>
Investments in securities, at value (cost $99,901) $97,403
Cash............................................................................ 1,038
Dividends and interest receivable............................................... 1,609
Due from advisor................................................................ 85
Prepaid expenses................................................................ 2,442
Total Assets............................................. 102,577
LIABILITIES:
Investment advisory fee payable................................................. 61
Distribution fee payable........................................................ 26
Administrative services fee payable............................................. 8
Transfer agent fee payable...................................................... 13
Accrued expenses................................................................ 2,919
Total Liabilities........................................ 3,027
NET ASSETS...................................................................... $99,550
NET ASSETS WERE COMPOSED OF:
Capital paid in for shares of beneficial interest , $0.01 par value outstanding
(unlimited shares authorized) ............................................. $101,271
Undistributed net investment income ............................................ 224
Accumulated net realized gain on investments.................................... 553
Net unrealized depreciation of investments...................................... (2,498)
Net Assets............................................... $99,550
CLASS A:
Net Assets...................................................................... $97,564
Shares outstanding.............................................................. 19,852
Net asset value and redemption value per share (net assets/shares outstanding) $4.91
Maximum offering price per share (net asset value plus sales charge of 4.75%
of offering price)........................................................... $5.15
CLASS B:
Net Assets...................................................................... $993
Shares outstanding.............................................................. 202
Net asset value and offering price per share.................................... $4.91
CLASS C:
Net Assets...................................................................... $993
Shares outstanding.............................................................. 202
Net asset value and offering price per share.................................... $4.91
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NORTHSTAR TRUST
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
FOR THE PERIOD JANUARY 31, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH APRIL 30, 1997
Northstar
High Total
Return II Fund
FROM OPERATIONS:
Net investment income............................................ $1,495
Net realized gain on investments................................. 553
Net change in unrealized depreciation.................
of investments.......................................... (2,498)
Decrease in net assets resulting from operations........ (450)
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class A................................................. (1,249)
Class B................................................. (11)
Class C................................................. (11)
(1,271)
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares................................. 100,000
Net asset value of shares issued to
shareholders in reinvestment of dividends............... 1,271
101,271
Cost of shares redeemed.......................................... 0
Net increase in net assets derived from capital
share transactions...................................... 101,271
Net increase in net assets....................................... 99,550
NET ASSETS:
Beginning of period.............................................. 0
End of period (including undistributed net investment income
of $224)............................................... $99,550
See accompanying notes to financial statements.
<PAGE>
NORTHSTAR TRUST
Notes to Financial Statements - April 30, 1997 (Unaudited)
Note 1. Organization and Significant Accounting Policies
Organization - The Northstar Trust, a business trust, was organized
under the laws of the Commonwealth of Massachusetts on August 18, 1993, and is
registered under the Investment Company Act of 1940 as a diversified open-end
management investment company. The name of the investment series featured in
this semi-annual report and its investment objective is set forth below. The
remaining four series of the Trust, Northstar Growth + Value Fund, Northstar
International Value Fund, Northstar Income & Growth Fund, and Northstar High
Total Return Fund are detailed in a separate semi-annual report dated April, 30,
1997. The Fund commenced operations on January 31, 1997.
Northstar High Total Return II Fund, ("Total Return II Fund" or the
"Fund") is a diversified portfolio whose investment objective is to seek
high income. The Fund invests primarily in a diversified group of fixed
income securities which are selected for high income, including lower
rated fixed income securities, convertible securities, securities issued
by U.S. companies in foreign currencies, and securities issued by
foreign governments and companies.
Security Valuation - Equity securities are valued at the closing sale
prices reported on recognized securities exchanges or lacking any sales, at the
last available bid price. Prices of long-term debt securities are valued on the
basis of last reported sales price, or if no sales are reported, the value is
determined based upon the mean of representative quoted bid or asked prices for
such securities, or, if such prices are not available, at prices provided by
market makers, or at prices for securities of comparable maturity, quality and
type. Short-term debt instruments with remaining maturities of less than 60 days
are valued at amortized cost, unless the Trustees determine that amortized cost
does not reflect the fair value of such obligations. Securities for which market
quotations are not readily available are valued at fair value determined in good
faith by or under direction of the Trustees of the Trust. The books and records
of the Fund is maintained in U.S. dollars. Securities quoted in foreign
currencies are translated into U.S. dollars based on the prevailing exchange
rates on that day. The Adviser uses independent pricing services to price the
Funds' securities.
Security Transactions, Investment Income, Expenses and Distributions to
Shareholders - Security transactions are recorded on the trade date. Realized
gains or losses on sales of investments are calculated on the identified cost
basis. Interest income is recorded on the accrual basis except when collection
is not expected; discounts are accrued, and premiums amortized to par at
maturity; dividend income is recorded on the ex-dividend dates. Income, expenses
(except class specific expenses), and realized/unrealized gains/losses, are
allocated proportionately to each class of shares based upon the relative net
asset value of outstanding shares. Dividends from net investment income are
declared and paid monthly by the Fund. Distributions of net realized capital
gains, if any, are declared annually; however, to the extent that a net realized
capital gain can be reduced by a capital loss carryover, such gain will not be
distributed.
Forward Foreign Currency Contracts and Options and Futures - The Fund
may enter into forward foreign currency contracts ("contracts") to purchase or
sell securities at a specified rate at a future date. The Fund may enter into
these contracts solely for hedging purposes.
The Fund writes and purchases put and call options on foreign
currencies. The premium paid by the Fund for the purchase of a call or put
option is recorded as an investment and subsequently "marked-to-market" to
reflect the current market value of the option. If an option which the Fund has
purchased expires on the stipulated expiration date, the Fund realizes a loss in
the amount of the cost of the option.
The amount of potential gain or loss to the Fund upon exercise of a
written call option is the value (in U.S. dollars) of the currency sold, less
the value of the U.S. dollars received in exchange. The amount of potential
<PAGE>
gain or loss to the Fund upon exercise of a written put option is the value (in
U.S. dollars) of the currency received, less the value of the U.S. dollars paid
in exchange.
Risks may arise upon entering these contracts from the potential
inability of counterparties to meet the terms of their contract and from
unanticipated movement in the value of a foreign currency relative to the U.S.
dollar.
Initial margin deposits made upon entering into futures contracts are
recognized as assets due from the broker (the Funds agent in acquiring the
futures position). During the period the futures contract is open, changes in
the value of the contract are recognized as unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the contract
at the end of each days trading.
Variation margin payments are received or made, depending upon whether
unrealized gains or losses are incurred. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transaction and the Funds basis in the contract.
Repurchase Agreements - The Funds' Custodian takes possession of
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to assure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. If the seller defaults and the value of the collateral declines or
if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
Federal Income Taxes - The Fund intends to comply with the special
provisions of the Internal Revenue Code available to investment companies and
to distribute all of the taxable net income to its shareholders. Therefore, no
Federal income tax provision or excise tax provision is required.
Organization Costs - Costs incurred by the Fund in connection with its
organization has been deferred and is being amortized on a straight-line basis
over a period of five years from the date the Fund commenced operations. The
Fund offers three classes of shares.
Note 2. Investment Adviser, Administrator and Distributor
Northstar, Inc. (and its wholly owned operating subsidiaries, Northstar
Investment Management Corp., Northstar Distributors, Inc. and Northstar
Administrator Corp.) is an 80% owned subsidiary of Reliastar Financial Corp.
Northstar Investment Management Corp. (the "Adviser") serves as the
Fund's investment adviser. The Fund pays the Adviser an investment advisory fee
calculated at an annual rate of 0.75% on the aggregate daily net assets of the
Fund. For the period ended April 30, 1997, the Adviser earned $177 in
investment advisory fees.
The Adviser has voluntarily undertaken to limit the expense through
October 31, 1997 of the Fund 1.20% (Class A), 2.20% (Class B), and 2.20% (Class
C). The Adviser will reimburse the Fund for amounts in excess of such limits.
At April 30, 1997, the Advisors reimbursement aggregated $4,485 for the Fund.
Northstar Administrators Corp. (the "Administrator"), an affiliate of
the Adviser, serves as the Fund's administrator. The Fund pays the
Administrator a fee calculated at an annual rate of 0.10% of the Fund's average
daily net assets, and an annual shareholder account servicing fee of $5.00,
payable semi-annually, for each account of beneficial owners of shares. For
the period ended April 30, 1997, the Administrator earned $24 in administrative
and account servicing fees.
<PAGE>
Northstar Distributors, Inc. (the "Distributor"), an affiliate of the
Adviser and the Administrator, is the distributor of the Fund's shares. Under
separate Plans of Distribution pertaining to Class A, Class B, and Class C
shares, the Fund pays the Distributor monthly service fees at an annual rate of
0.25% of the average daily net assets in the case of Class A, Class B and Class
C shares, and monthly distribution fees at the annual rate of 0.05% of the
average daily net assets of Class A shares, and 0.75% of the average daily net
assets of Class B and Class C shares. At April 30, 1997 the Fund owed the
Distributor $26 in service and distribution fees. The Distributor also receives
the proceeds of the initial sales charges paid by shareholders upon the purchase
of Class A shares, and the contingent deferred sales charge paid by shareholders
upon certain redemptions of Class A, Class B and Class C shares. For the period
ended April 30, 1997, there were no initial sales charges or contingent deferred
sales charges paid by shareholders.
Note 3. Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments
(excluding short-term investments) for the period ended April 30, 1997, were as
follows:
Aggregate purchases $115,272
Aggregate sales $18,778
U.S. Government Securities included above were as follows:
Aggregate purchases --
Aggregate sales --
Note 4. Portfolio Securities (Tax Basis)
The cost of securities for federal income tax purposes and the aggregate
appreciation and depreciation of securities at April 30, 1997 were as follows:
Cost (tax basis) $99,901
Appreciated securities 529
Depreciated securities (3,027)
Net unrealized depreciation ($2,498)
Note 5. Capital Share Transactions
Transactions in capital shares of the Fund for the period ended April
30, 1997, were as follows:
Class A Class B Class C
Shares Amount Shares Amount Shares Amount
Shares sold 19,600 $98,000 200 $1,000 200 $1,000
Reinvested dividends 252 1,249 2 11 2 11
Net increase 19,852 99,249 202 1,011 202 1,011
<PAGE>
Note 6. Credit risk and Defaulted Securities
Although the Fund has a diversified portfolio, it had 95.33% of its
portfolio invested in lower rated and comparable quality unrated high yield
securities. Investments in higher yield securities are accompanied by a greater
degree of credit risk and such lower rated securities tend to be more sensitive
to economic conditions than higher rated securities. The risk of loss due to
default by the issuer may be significantly greater for the holders of high
yielding securities, because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.
For financial reporting purposes, it is the Fund's accounting practice
to discontinue accrual of income and provide an estimate for probable losses due
to unpaid interest income on defaulted bonds for the current reporting period.
Note 7. Security Loans
The Fund may lend its securities to brokers, dealers and other financial
institutions in amounts up to one third of the value of its total assets. The
loans are fully collateralized at all times by cash or liquid high grade
securities. As with other extensions of credit, the Fund may bear the risk of
delay in recovery or even loss of rights in the collateral should the borrower
of the securities fail financially. The Fund receives compensation for lending
its securities in the form of fees or from all or a portion of the income from
investment of the collateral. The Fund also continue to earn income on the
securities loaned. At April 30, 1997, the Fund did not have any securities on
loan.
Note 8. Managements Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
<PAGE>
NORTHSTAR TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
FROM INCEPTION OF EACH SHARE CLASS OFFERINGTHROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
Net Dividends
realized & Total declared
Net Asset Net unrealized from from net Net Asset
Value, invest- gain(loss) invest- invest- Value, %
Period beginning ment on ment ment end Total
ended of period income investments operations income of period return
<S> <C>
High Total Return II Fund, Class A
1/31/97-
04/30/97 5.00 0.07 (0.10) (0.03) (0.06) 4.91 (0.54)
High Total Return II Fund, Class B
1/31/97-
04/30/97 5.00 0.07 (0.11) (0.04) (0.05) 4.91 (0.71)
High Total Return II Fund, Class C
1/31/97-
04/30/97 5.00 0.07 (0.11) (0.04) (0.05) 4.91 (0.71)
</TABLE>
<TABLE>
<CAPTION>
%
Ratio of
Net % expense Ratio of net
Assets, Ratio of reimburs- investment
end of expenses ment income
Period period to average to average to average Portfolio
ended (000's) net assets net assets net assets turnover
<S> <C>
High Total Return II Fund, Class A
1/31/97-
04/30/97 98 1.50 18.97 6.34 23
High Total Return II Fund, Class B
1/31/97-
04/30/97 1 2.20 17.85 5.29 23
High Total Return II Fund, Class C
1/31/97-
04/30/97 1 2.20 17.85 5.29 23
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NORTHSTAR TRUST
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1997
<TABLE>
<CAPTION>
Northstar Northstar Northstar Northstar
Growth + International Income and High Total
Value Fund Value Fund Growth Fund Return Fund
----------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, at value (cost $43,370,003,
$35,669,920 $157,889,838, and $726,984,201, respectively) $43,600,125 $40,179,896 $178,883,639 $712,531,523
Repurchase agreements 2,169,000 2,524,000 8,334,000 93,911,000
Cash 733 389 698 976
Receivable for investments sold 1,163,973 0 0 0
Receivable for shares of beneficial interest sold 801,987 1,177,711 76,925 13,546,150
Dividends and interest receivable 28,544 268,713 501,705 13,319,891
Due from adviser 2,400 33 0 0
Prepaid expenses 36,944 59,722 27,575 45,148
----------------------------------------------------------
Total Assets 47,803,706 44,210,464 187,824,542 833,354,688
----------------------------------------------------------
LIABILITIES:
Payable for investments purchased 1,427,430 0 0 16,224,653
Payable for shares of beneficial interest reacquired 137,886 129,723 94,292 1,433,210
Investment advisory fee payable 34,550 13,841 112,759 449,676
Distribution fee payable 27,723 9,211 120,566 533,104
Administrative services fee payable 3,455 1,384 15,034 64,672
Transfer agent fee payable 434 7,828 37,975 157,488
Dividends payable 0 0 0 684
Accrued expenses 16,843 51,645 42,977 210,482
----------------------------------------------------------
Total Liabilities 1,648,321 213,632 423,603 19,073,969
----------------------------------------------------------
NET ASSETS $46,155,385 $43,996,832 $187,400,939 $814,280,719
----------------------------------------------------------
----------------------------------------------------------
NET ASSETS WERE COMPOSED OF:
Capital paid in for shares of benefical interest, $.01 par
value outstanding (unlimited shares authorized) $47,879,435 $38,014,143 $160,836,340 $828,767,519
Undistributed (overdistributed) net investment income (97,848) (53,212) 105,468 (1,797,598)
Accumulated net realized gain (loss) on investments (1,856,324) 1,534,642 5,465,330 1,763,476
Net unrealized appreciation (depreciation) of investments
and foreign currency 230,122 4,501,259 20,993,801 (14,452,678)
----------------------------------------------------------
Net Assets $46,155,385 $43,996,832 $187,400,939 $814,280,719
----------------------------------------------------------
----------------------------------------------------------
CLASS A:
Net Assets $13,263,139 $20,918,289 $ 52,661,812 $203,202,833
----------------------------------------------------------
Shares outstanding 1,410,375 2,078,991 4,554,166 43,756,007
----------------------------------------------------------
Net asset value and redemption value per share (net
assets/shares outstanding) $ 9.40 $ 10.06 $ 11.56 $ 4.64
----------------------------------------------------------
----------------------------------------------------------
Maximum offering price per share (net asset value plus
sales charge of 4.75% of offering price) $ 9.87 $ 10.56 $ 12.14 $ 4.87
----------------------------------------------------------
----------------------------------------------------------
CLASS B:
Net Assets $24,571,960 $ 759,899 $ 71,952,700 $521,775,728
----------------------------------------------------------
Shares outstanding 2,618,471 75,486 6,233,183 112,439,970
----------------------------------------------------------
Net asset value and offering price per share $ 9.38 $ 10.07 $ 11.54 $ 4.64
----------------------------------------------------------
----------------------------------------------------------
CLASS C:
Net Assets $ 8,320,286 $22,318,644 $ 62,786,427 $ 89,302,158
----------------------------------------------------------
Shares outstanding 886,581 2,218,677 5,445,764 19,163,701
----------------------------------------------------------
Net asset value and offering price per share $ 9.38 $ 10.06 $ 11.53 $ 4.66
----------------------------------------------------------
----------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
NORTHSTAR TRUST
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
Northstar Northstar Northstar Northstar
Growth + International Income and High Total
Value Fund Value Fund Growth Fund Return Fund
<S> <C>
-----------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of withholding tax of $615, $38,794, $0, and
$0, respectively) $ 83,757 $ 359,404 $ 2,795,049 $ 1,676,452
Interest 43,005 57,246 1,698,625 36,240,112
-----------------------------------------------------------
Total investment income 126,762 416,650 4,493,674 37,916,564
-----------------------------------------------------------
EXPENSES:
Investment advisory and management fees 96,035 194,134 763,965 2,418,397
Distribution fees:
Class A 8,776 34,971 102,385 277,951
Class B 50,824 75 363,286 2,154,343
Class C 15,952 93,200 314,050 357,464
Transfer agent fees and expenses:
Class A 1,249 27,440 63,118 166,064
Class B 2,512 13 64,423 396,460
Class C 950 26,817 47,210 71,102
Registration fees 27,582 16,502 19,647 68,241
Administrative service fees 9,604 29,367 118,926 439,769
Custodian and fund accounting expenses 7,273 67,995 93,850 302,533
Audit expenses 6,557 10,453 12,105 21,495
Trustee expenses 3,376 6,700 8,499 15,616
Printing and postage expenses 2,029 11,149 15,354 106,963
Legal expenses 1,540 18,458 4,337 18,219
Organizational expenses 473 10,382 4,824 4,824
Miscellaneous expenses 403 20,993 11,026 27,587
-----------------------------------------------------------
235,135 568,649 2,007,005 6,847,028
Less expenses reimbursed by management company 10,525 149,108 0 0
-----------------------------------------------------------
Total expenses 224,610 419,541 2,007,005 6,847,028
-----------------------------------------------------------
Net investment income (loss) (97,848) (2,891) 2,486,669 31,069,536
-----------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (loss) on investments (1,856,324) 1,331,482 5,584,649 1,092,653
Net realized loss on foreign currency 0 (85,044) 0 0
Net change in unrealized appreciation (depreciation) of
investments and foreign currency 230,122 3,902,227 6,800,567 (23,537,786)
-----------------------------------------------------------
Net realized and unrealized gain (loss) on investments (1,626,202) 5,148,665 12,385,216 (22,445,133)
-----------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($ 1,724,050) $ 5,145,774 $14,871,885 $ 8,624,403
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
NORTHSTAR TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Northstar
Growth + Northstar Northstar
Value Fund International Value Fund Income and Growth Fund
------------------ ------------------------------------- -------------------------------------
<S> <C>
For the period For the period For the year For the six For the year
ended ended ended months ended ended
April 30, 1997 (1) April 30, 1997 (1) October 31, 1996 April 30, 1997 (1) October 31, 1996
--------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income
(loss) ($ 97,848) ($ 2,891) $ 294,379 $ 2,486,669 $ 4,848,014
Net realized gain
(loss) on investments (1,856,324) 1,331,482 1,078,369 5,584,649 23,384,520
Net realized loss on
foreign currency 0 (85,044) 0 0 (63)
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency 230,122 3,902,227 756,605 6,800,567 (354,693)
--------------------------------------------------------------------------------------------------
Increase (decrease) in
net assets resulting
from operations (1,724,050) 5,145,774 2,129,353 14,871,885 27,877,778
FROM DIVIDENDS TO
SHAREHOLDERS:
Net investment
income:
Class A 0 (262,842) (31,554) (1,064,097) (2,181,639)
Class B 0 0 0 (776,393) (1,332,583)
Class C 0 (74,358) (22,395) (683,734) (1,190,706)
Net realized gain
from investments 0 (790,064) 0 (22,088,154) 0
--------------------------------------------------------------------------------------------------
Total distributions 0 (1,127,264) (53,949) (24,612,378) (4,704,928)
--------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
Net proceeds from
sale of shares 49,085,634 14,919,493 39,494,886 17,650,099 32,261,734
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends 0 1,087,022 53,949 17,897,535 3,175,945
--------------------------------------------------------------------------------------------------
49,085,634 16,006,515 39,548,835 35,547,634 35,437,679
Cost of shares
redeemed (1,206,199) (7,335,089) (21,254,944) (55,237,004) (31,818,353)
--------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets derived
from capital share
transactions 47,879,435 8,671,426 18,293,891 (19,689,370) 3,619,326
--------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets 46,155,385 12,689,936 20,369,295 (29,429,863) 26,792,176
NET ASSETS:
Beginning of period 0 31,306,896 10,937,601 216,830,802 190,038,626
--------------------------------------------------------------------------------------------------
End of period $ 46,155,385 $ 43,996,832 $ 31,306,896 $187,400,939 $ 216,830,802
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income ($ 97,848) ($ 53,212) $ 286,879 $ 105,468 $ 143,023
--------------------------------------------------------------------------------------------------
</TABLE>
Northstar
High Total Return Fund
-------------------------------------
For the six For the year
months ended ended
April 30, 1997 (1) October 31, 1996
FROM OPERATIONS:
Net investment income
(loss) $ 31,069,536 $ 33,820,265
Net realized gain
(loss) on investments 1,092,653 6,942,609
Net realized loss on
foreign currency 0 0
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency (23,537,786) 12,167,393
-------------------------------------
Increase (decrease) in
net assets resulting
from operations 8,624,403 52,930,267
FROM DIVIDENDS TO
SHAREHOLDERS:
Net investment
income:
Class A (9,270,401) (13,178,032)
Class B (20,234,497) (19,778,603)
Class C (3,362,236) (2,906,227)
Net realized gain
from investments 0 0
-------------------------------------
Total distributions (32,867,134) (35,862,862)
-------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
Net proceeds from
sale of shares 303,712,692 387,483,470
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends 10,836,099 12,475,223
-------------------------------------
314,548,791 399,958,693
Cost of shares
redeemed (45,024,517) (43,950,880)
-------------------------------------
Net increase (decrease)
in net assets derived
from capital share
transactions 269,524,274 356,007,813
-------------------------------------
Net increase (decrease)
in net assets 245,281,543 373,075,218
NET ASSETS:
Beginning of period 568,999,176 195,923,958
-------------------------------------
End of period $814,280,719 $ 568,999,176
=====================================
Undistributed
(overdistributed) net
investment income ($ 1,797,598) $ 0
-------------------------------------
(1) Unaudited
See accompanying notes to financial statements.
28
<PAGE>
NORTHSTAR TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
Net realized Dividends Net
Net Asset & unrealized declared Distributions Asset
Value, Net gain (loss) Total from from net declared from Value,
Period beginning investment on investment investment net realized end of Total
ended of period income investments operations income gains period Return
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Growth + Value Fund, Class A
-----------------------------------
11/18/96-
04/30/97 (2) $ 10.00 ($0.01) ($0.59) ($0.60) $ -- $ -- $ 9.40 (6.00%)
Growth + Value Fund, Class B
-----------------------------------
11/18/96-
04/30/97 (2) 10.00 (0.02) (0.60) (0.62) -- -- 9.38 (6.20)
Growth + Value Fund, Class C
-----------------------------------
11/18/96-
04/30/97 (2) 10.00 (0.02) (0.60) (0.62) -- -- 9.38 (6.20)
International Value Fund, Class A
-----------------------------------
03/06/95
10/31/95 7.64 0.09 0.37 0.46 -- -- 8.10 6.08
10/31/96 8.10 0.14 0.84 0.98 (0.03) -- 9.05 12.15
04/30/97 (2) 9.05 (0.10) 1.47 1.37 (0.14) (0.22) 10.06 15.70
International Value Fund, Class B
-----------------------------------
04/17/97-
04/30/97 (2) 10.00 0.01 0.06 0.07 -- -- 10.07 0.70
International Value Fund, Class C
-----------------------------------
03/06/95
10/31/95 7.61 0.06 0.38 0.44 -- -- 8.05 5.76
10/31/96 8.05 0.05 0.86 0.91 (0.03) -- 8.93 12.79
04/30/97 (2) 8.93 (0.05) 1.39 1.34 (0.04) (0.17) 10.06 14.82
Income and Growth Fund, Class A
-----------------------------------
11/08/93-
10/31/94 10.00 0.30 (0.05) 0.25 (0.25) -- 10.00 2.48
10/31/95 10.00 0.35 0.84 1.19 (0.33) -- 10.86 13.19
10/31/96 10.86 0.32 1.29 1.61 (0.31) -- 12.16 14.48
04/30/97 (2) 12.16 0.40 0.44 0.84 (0.18) (1.26) 11.56 7.17
Income and Growth Fund, Class B
-----------------------------------
2/09/94-
10/31/94 10.64 0.20 (0.65) (0.45) (0.20) -- 9.99 (4.20)
10/31/95 9.99 0.27 0.85 1.12 (0.27) -- 10.84 12.31
10/31/96 10.84 0.24 1.28 1.52 (0.23) -- 12.13 13.60
04/30/97 (2) 12.13 0.26 0.54 0.80 (0.13) (1.26) 11.54 6.76
Income and Growth Fund, Class C
-----------------------------------
3/21/94-
10/31/94 10.37 0.20 (0.38) (0.18) (0.20) -- 9.99 (1.75)
10/31/95 9.99 0.27 0.85 1.12 (0.28) -- 10.83 12.33
10/31/96 10.83 0.24 1.28 1.52 (0.23) -- 12.12 13.68
04/30/97 (2) 12.12 0.26 0.54 0.80 (0.13) (1.26) 11.53 6.85
High Total Return Fund, Class A
-----------------------------------
11/08/93-
10/31/94 5.00 0.41 (0.60) (0.19) (0.40) -- 4.41 (4.11)
10/31/95 4.41 0.48 0.07 0.55 (0.48) -- 4.48 13.02
10/31/96 4.48 0.46 0.32 0.78 (0.48) -- 4.78 18.14
04/30/97 (2) 4.78 0.24 (0.15) 0.09 (0.23) -- 4.64 1.93
High Total Return Fund, Class B
-----------------------------------
2/09/94-
10/31/94 5.20 0.33 (0.80) (0.47) (0.32) -- 4.41 (9.30)
10/31/95 4.41 0.45 0.06 0.51 (0.45) -- 4.47 11.97
10/31/96 4.47 0.43 0.32 0.75 (0.45) -- 4.77 17.08
04/30/97 (2) 4.77 0.23 (0.14) 0.09 (0.22) -- 4.64 1.57
High Total Return Fund, Class C
-----------------------------------
3/21/94-
10/31/94 5.06 0.26 (0.65) (0.39) (0.26) -- 4.41 (7.21)
10/31/95 4.41 0.44 0.09 0.53 (0.45) -- 4.49 12.44
10/31/96 4.49 0.43 0.32 0.75 (0.45) -- 4.79 17.28
04/30/97 (2) 4.79 0.23 (0.14) 0.09 (0.22) -- 4.66 1.57
Ratio of Ratio of
Net expenses Ratio of net investment
Assets, to expense income to
end of average reimbursement average Average
Period period net to average net Portfolio Commissions
ended (000's) assets(1) net assets(1) assets(1) turnover Per Share
<S> <C>
11/18/96-
04/30/97 (2 $13,263 1.85% 0.09% (0.51%) 53% $0.0383
11/18/96-
04/30/97 (2) 24,572 2.55 0.11 (1.24) 53 0.0383
11/18/96-
04/30/97 (2) 8,320 2.55 0.11 (1.25) 53 0.0383
03/06/95
10/31/95 5,188 1.85 6.08 1.67 0 --
10/31/96 16,777 1.85 0.97 1.52 74 0.0314
04/30/97 (2) 20,918 1.83 0.75 0.27 10 0.0191
04/17/97-
04/30/97 (2) 760 2.50 -- 13.46 10 0.0191
03/06/95
10/31/95 5,749 2.50 6.08 1.13 0 --
10/31/96 14,530 2.50 1.21 0.62 74 0.0314
04/30/97 (2) 22,319 2.51 0.78 (0.33) 10 0.0191
11/08/93-
10/31/94 72,223 1.50 0.47 3.73 26 --
10/31/95 76,031 1.51 -- 3.39 91 --
10/31/96 85,250 1.52 -- 2.78 147 0.0600
04/30/97 (2) 52,662 1.52 -- 2.90 17 0.0551
2/09/94-
10/31/94 37,767 2.20 0.16 3.00 26 --
10/31/95 60,347 2.23 -- 2.66 91 --
10/31/96 71,123 2.26 -- 2.04 147 0.0600
04/30/97 (2) 71,953 2.21 -- 2.20 17 0.0551
3/21/94-
10/31/94 4,823 2.20 0.06 2.87 26 --
10/31/95 53,661 2.22 -- 2.67 91 --
10/31/96 60,458 2.20 -- 2.10 147 0.0600
04/30/97 (2) 62,786 2.18 -- 2.54 17 0.0551
11/08/93-
10/31/94 50,797 1.50 0.99 10.09 163 --
10/31/95 88,552 1.55 -- 10.90 145 --
10/31/96 167,698 1.52 -- 9.86 158 --
04/30/97 (2) 203,203 1.47 -- 9.55 51 --
2/09/94-
10/31/94 25,880 2.20 0.20 9.72 163 --
10/31/95 96,362 2.25 -- 10.20 145 --
10/31/96 346,919 2.23 -- 9.14 158 --
04/30/97 (2) 521,776 2.18 -- 8.85 51 --
3/21/94-
10/31/94 2,330 2.20 0.11 9.46 163 --
10/31/95 11,011 2.27 -- 10.18 145 --
10/31/96 54,382 2.23 -- 9.14 158 --
04/30/97 (2) 89,302 2.20 -- 8.81 51 --
</TABLE>
(1) Annualized
(2) Unaudited
See accompanying notes to financial statements
29
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1997
(UNAUDITED)
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization -- The Northstar Trust, a business trust, was organized under
the laws of the Commonwealth of Massachusetts and registered under the
Investment Company Act of 1940 as a diversified open-end management investment
company. The names of each of the four investment series which comprise the
Trust (the "Funds") and their respective investment objectives are set forth
below.
NORTHSTAR GROWTH + VALUE FUND, ("Growth + Value Fund") is a diversified
portfolio with the investment objective of capital appreciation by investing in
equity securities. The Fund seeks to achieve its objective through investments
in a diversified group of securities identified as either growth or value
through quantitative analysis.
NORTHSTAR INTERNATIONAL VALUE FUND, ("International Value Fund") is a
diversified portfolio with the investment objective of long term capital
appreciation through "value investing". The Fund invests primarily in foreign
companies with a market valuation of greater than $1 billion, but may hold up to
25% of its assets in companies with smaller market capitalization.
NORTHSTAR INCOME AND GROWTH FUND, ("Income and Growth Fund") is a
diversified portfolio with the investment objective of current income balanced
with the objective of achieving capital appreciation. The Fund seeks to achieve
its objective through investments in a diversified group of securities selected
for their prospects of current yield and capital appreciation.
NORTHSTAR HIGH TOTAL RETURN FUND, ("Total Return Fund") is a diversified
portfolio whose investment objective is to seek high income. The Fund invests
primarily in a diversified group of fixed income securities which are selected
for high income, including lower rated fixed income securities, convertible
securities, securities issued by U.S. companies in foreign currencies, and
securities issued by foreign governments and companies.
Security Valuation -- Equity securities are valued at the closing sale
prices reported on recognized securities exchanges or lacking any sales, at the
last available bid price. Prices of long-term debt securities are valued on the
basis of last reported sales price, or if no sales are reported, the value is
determined based upon the mean of representative quoted bid or asked prices for
such securities, or, if such prices are not available, at prices provided by
market makers, or at prices for securities of comparable maturity, quality and
type. Short-term debt instruments with remaining maturities of less than 60 days
are valued at amortized cost, unless the Trustees determine that amortized cost
does not reflect the fair value of such obligations. Securities for which market
quotations are not readily available are valued at fair value determined in good
faith by or under direction of the Trustees of the Trust. The books and records
of the Funds are maintained in U.S. dollars. Securities quoted in foreign
currencies are translated into U.S. dollars based on the prevailing exchange
rates on that day. The Adviser uses independent pricing services to price the
Funds' securities.
Management's Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date(s) of financial statements and the reported amounts of
income and expenses during the reporting period(s). Actual results could differ
from those estimates.
Security Transactions, Investment Income, Expenses -- Security transactions
are recorded on the trade date. Realized gains or losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis except when collection is not expected; discounts are accrued, and
premiums amortized to par at maturity; dividend income is recorded on the
ex-dividend dates. Income, expenses (except class specific expenses), and
realized/unrealized gains/losses, are allocated proportionately to each Fund or
class of shares based upon the relative net asset value.
Distributions to Shareholders -- Dividends from net investment income are
declared and paid monthly by the Total Return Fund, and declared and paid
quarterly by the Income and Growth Fund, and declared and paid annually by the
Growth + Value Fund and International Value Fund. Distributions of net realized
capital gains, if any, are declared annually; however, to the extent that a net
realized capital gain can be reduced by a capital loss carryover, such gain will
not be distributed.
The Funds may periodically make reclassifications among certain of their
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulation which may differ from generally accepted accounting
principles.
Foreign Currency -- The Funds isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held.
Net realized and unrealized gain(loss) on foreign currency transactions
represents the foreign exchange:
(1) gains and losses from the sale of holdings of foreign currencies, (2)
gains and losses between trade date and settlement date on investment securities
transactions and forward
30
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1997
(UNAUDITED)
exchange contracts, and (3) gains and losses from the difference between amounts
of interest and dividends recorded and the amounts actually received.
Forward Foreign Currency Contracts and Options and Futures -- The Funds may
enter into forward foreign currency contracts ("contracts") to purchase or sell
currencies at a specified rate at a future date. The Funds may enter into these
contracts solely for hedging purposes.
The Funds write and purchase put and call options on foreign currencies. The
premium paid by the Funds for the purchase of a call or put option is recorded
as an investment and subsequently "marked-to-market" to reflect the current
market value of the option. If an option which the Funds have purchased expires
on the stipulated expiration date, the Funds realize a loss in the amount of the
cost of the option.
The amount of potential gain or loss to the Funds upon exercise of a written
call option is the value (in U.S. dollars) of the currency sold, less the value
of the U.S. dollars received in exchange. The amount of potential gain or loss
to the Funds upon exercise of a written put option is the value (in U.S.
dollars) of the currency received, less the value of the U.S. dollars paid in
exchange.
Risks may arise upon entering these contracts from the potential inability
of counterparties to meet the terms of their contract and from unanticipated
movement in the value of a foreign currency relative to the U.S. dollar.
Initial margin deposits made upon entering into future contracts are
recognized as assets due from the broker (the Fund's agent in acquiring the
futures position). During the period the futures contract is open, changes in
the value of the contract are recognized as unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the contract
at the end of each day's trading.
Variation margin payments are received or made, depending upon whether
unrealized gains or losses are incurred. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transaction and the Fund's basis in the contract.
Repurchase Agreements -- The Funds' Custodian takes possession of collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to assure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Funds have the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
Federal Income Taxes -- The Trust intends to comply with the special
provisions of the Internal Revenue Code available to investment companies and to
distribute all of the taxable net income to their respective shareholders.
Therefore, no Federal income tax provision or excise tax provision is required.
Organization Costs -- Costs incurred by the Trust in connection with its
organization of each Fund have been deferred and are being amortized over a
period of five years from the date the Funds commenced operations. Each Fund
offers three classes of shares.
NOTE 2. INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
Northstar, Inc. (and its wholly owned operating subsidiaries, Northstar
Investment Management Corp., Northstar Distributors, Inc. and Northstar
Administrator Corp.) is an 80% owned subsidiary of Reliastar Financial Corp.
Northstar Investment Management Corp. (the "Adviser") serves as each Fund's
investment adviser. The Growth + Value and International Value Fund pays the
Adviser an investment advisory fee calculated at an annual rate of 1.00% of
average daily net assets. Income and Growth and Total Return Fund pay the
Adviser an investment advisory fee calculated at an annual rate of 0.75% on the
first $250,000,000 of aggregate average daily net assets; 0.70% on the next
$250,000,000 of such assets; 0.65% on the next $250,000,000 of such assets;
0.60% on the next $250,000,000 of such assets; and 0.55% on the remaining
aggregate daily net assets of each Fund in excess of $1 billion. For the six
months ended April 30, 1997, the Adviser earned $3,292,238 in investment
advisory fees. For the period ended April 18, 1997, Brandes Investment Partners,
L.P. earned $180,293 in investment advisory fees. Northstar Administrators Corp.
(the "Administrator"), an affiliate of the Adviser, serves as each Fund's
administrator. The Funds pay the Administrator a fee calculated at an annual
rate of 0.10% of each Fund's average daily net assets, and an annual shareholder
account servicing fee of $5.00, payable semi-annually, for each account of
beneficial owners of shares. For the six months ended April 30, 1997, the
Administrator earned $569,683 in administrative and account servicing fees. For
the period ended April 18, 1997, Wadsworth and Associates earned $27,983 in
administrative fees. Northstar Distributors, Inc. (the "Distributor"), an
affiliate of the Adviser and the Administrator, is the distributor of each
Fund's shares. Under separate Plans of Distribution pertaining to Class A, Class
B, and Class C shares, the
31
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1997
(UNAUDITED)
Trust pays the Distributor monthly service fees at an annual rate of 0.25% of
the average daily net assets in the case of Class A, Class B and Class C shares,
and monthly distribution fees at the annual rate of 0.05% of the average daily
net assets of Class A shares, and 0.75% of the average daily net assets of Class
B and Class C shares. At April 30, 1997, the Trust owed the Distributor $690,604
in service and distribution fees. The Distributor also receives the proceeds of
the initial sales charges paid by shareholders upon the purchase of Class A
shares, and the contingent deferred sales charge paid by shareholders upon
certain redemptions of Class A, Class B and Class C shares. For the six months
ended April 30, 1997, the Distributor earned the following amounts in sales
charges:
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- -------- -------
Initial sales charges $2,595,652 N/A N/A
Contingent deferred sales
charges N/A $648,361 $28,868
NOTE 3. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
(excluding short-term investments) for the six months ended April 30, 1997, were
as follows:
GROWTH+ INTERNATIONAL INCOME & HIGH TOTAL
VALUE FUND VALUE FUND GROWTH FUND RETURN FUND
------------- ------------- ----------- ------------
Aggregate
Purchases $ 11,228,385 $12,432,166 $88,973,705 $442,168,425
Aggregate
Sales $ 56,842,997 $ 3,818,061 $33,399,733 $314,472,148
U.S. Government Securities included above were as follows:
GROWTH+ INTERNATIONAL INCOME & HIGH TOTAL
VALUE FUND VALUE FUND GROWTH FUND RETURN FUND
------------- ------------- ----------- -----------
Aggregate
Purchases $ -- $ -- $12,425,725 $ --
Aggregate
Sales $ -- $ -- $ -- $ --
NOTE 4. PORTFOLIO SECURITIES (TAX BASIS)
The cost of securities for federal income tax purposes and the aggregate
appreciation and depreciation of securities at April 30, 1997 were as follows:
GROWTH+ INTERNATIONAL INCOME & HIGH TOTAL
VALUE FUND VALUE FUND GROWTH FUND RETURN FUND
----------- ------------- ------------ ------------
Cost (tax
basis) $43,370,003 $35,669,920 $157,889,838 $726,984,201
----------- ------------- ------------ ------------
Appreciated
securities 2,313,853 5,415,629 24,224,811 21,121,972
Depreciated
securities (2,083,731) (905,653) (3,231,010) (35,574,650)
----------- ------------- ------------ ------------
Net
unrealized
appreciation/
depreciation $ 230,122 $ 4,509,976 $ 20,993,801 ($14,452,678)
----------- ------------- ------------ ------------
----------- ------------- ------------ ------------
NOTE 5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each Fund for the period ended April 30,
1997, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR GROWTH + VALUE FUND
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- -----------
<S> <C>
Shares
sold 1,466,876 $ 14,290,662 2,669,061 $ 26,019,957 906,692 $ 8,775,015
Reinvested
dividends 0 0 0 0 0 0
Shares
redeemed (56,501) (537,278) (50,590) (476,887) (20,111) (192,034)
----------- ------------ ---------- ------------ ---------- -----------
Net
increase 1,410,375 $ 13,753,384 2,618,471 $ 25,543,070 886,581 $ 8,582,981
----------- ------------ ---------- ------------ ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
NORTHSTAR INTERNATIONAL VALUE FUND
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- -----------
<S> <C>
Shares
sold 678,218 $ 6,683,381 75,486 $ 755,872 764,487 $ 7,480,240
Reinvested
dividends 65,938 647,027 0 0 44,366 439,995
Shares
redeemed (519,573) (5,210,745) (0) (0) (216,121) (2,124,344)
----------- ------------ ---------- ------------ ---------- -----------
Net
increase 224,583 $ 2,119,663 75,486 $ 755,872 592,732 $ 5,795,891
----------- ------------ ---------- ------------ ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
NORTHSTAR INCOME & GROWTH FUND
-----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- ------------
<S> <C>
Shares
sold 801,043 $ 9,396,501 556,576 $ 6,529,233 146,833 $ 1,724,365
Reinvested
dividends 514,663 5,930,938 443,893 5,106,054 596,927 6,860,543
Shares
redeemed (3,773,391) (44,371,310) (629,841) (7,485,489) (286,718) (3,380,205)
----------- ------------ ---------- ------------ ---------- -----------
Net
increase
(decrease) (2,457,685) ($29,043,871) 370,628 $ 4,149,798 457,042 $ 5,204,703
----------- ------------ ---------- ------------ ---------- -----------
</TABLE>
32
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
NORTHSTAR HIGH TOTAL RETURN FUND
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- -----------
<S> <C>
Shares
sold 12,079,286 $ 57,868,005 42,162,283 $201,894,233 9,075,049 $43,950,454
Reinvested
dividends 859,015 4,096,137 1,214,027 5,780,391 201,823 959,571
Shares
redeemed (4,292,155) (20,518,236) (3,626,381) (17,324,144) (1,460,419) (7,182,137)
----------- ------------ ---------- ------------ ---------- -----------
Net
increase 8,646,146 $ 41,445,906 39,749,929 $190,350,480 7,816,453 $37,727,888
----------- ------------ ---------- ------------ ---------- -----------
</TABLE>
Transactions in capital shares of each class of shares of each Fund for the
period ended October 31, 1996, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR INTERNATIONAL VALUE FUND
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- -----------
<S> <C>
Shares
sold 3,415,183 $ 30,122,061 N/A N/A 1,079,936 $ 9,347,820
Reinvested
dividends 3,692 31,554 N/A N/A 2,642 22,395
Shares
redeemed (2,204,784) (19,730,781) N/A N/A (171,132) (1,498,538)
----------- ------------ ---------- ------------ ---------- -----------
Net
increase 1,214,091 $ 10,422,834 N/A N/A 911,446 $ 7,871,677
----------- ------------ ---------- ------------ ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
NORTHSTAR INCOME & GROWTH FUND
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- -----------
<S> <C>
Shares
sold 1,198,735 $ 13,791,336 1,141,776 $ 13,002,930 479,099 $ 5,467,468
Reinvested
dividends 107,624 1,241,919 67,273 775,255 100,714 1,158,771
Shares
redeemed (1,296,115) (14,970,646) (914,164) (10,500,448) (546,984) (6,347,259)
----------- ------------ ---------- ------------ ---------- -----------
Net
increase 10,244 $ 62,609 294,885 $ 3,277,737 32,829 $ 278,980
----------- ------------ ---------- ------------ ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
NORTHSTAR HIGH TOTAL RETURN FUND
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- -----------
<S> <C>
Shares
sold 19,103,809 $ 90,286,429 53,275,516 $251,447,650 9,644,386 $45,749,391
Reinvested
dividends 1,198,552 5,639,075 1,254,865 5,910,931 195,560 925,217
Shares
redeemed (4,968,565) (23,506,025) (3,380,239) (15,980,031) (944,003) (4,464,824)
----------- ------------ ---------- ------------ ---------- -----------
Net
increase 15,333,796 $ 72,419,479 51,150,142 $241,378,550 8,895,943 $42,209,784
----------- ------------ ---------- ------------ ---------- -----------
</TABLE>
NOTE 6. CREDIT RISK AND DEFAULTED SECURITIES
Although the Funds have a diversified portfolio, the Total Return Fund had
78.33% of its portfolio invested in lower rated and comparable quality unrated
high yield securities. Investments in higher yield securities are accompanied by
a greater degree of credit risk and such lower rated securities tend to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities, because such securities are generally unsecured and
are often subordinated to other creditors of the issuer. At April 30, 1997, the
Total Return Fund held Color Tile, Inc., as a bankrupt security. The aggregate
value of this security is $0.
For financial reporting purposes, it is each Fund's accounting practice to
discontinue accrual of income and provide an estimate for probable losses due to
unpaid interest income on defaulted bonds for the current reporting period.
NOTE 7. SECURITY LOANS
Each Fund may lend its securities to brokers, dealers and other financial
institutions in amounts up to one third of the value of its total assets. The
loans are fully collateralized at all times by cash or liquid high grade
securities. As with other extensions of credit, each Fund may bear risk of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Funds receive compensation for lending its
securities in the form of fees or all or a portion of the income from
investments of the collateral. The Funds also continue to earn income on the
securities loaned. At April 30,1997, the Funds did not have any securities on
loan.
NOTE 8. FEDERAL INCOME TAX -- CAPITAL LOSS CARRYFORWARD
At October 31, 1996, the Income and Growth Fund had capital loss
carryforwards expiring October 31, 2002 and 2003 of $426,333 and $1,331,400,
respectively. Total Return Fund had capital loss carryforwards expiring October
31, 2002 and 2003 of $1,846,302 and $2,478,205, respectively.
NOTE 9. ACQUISITION
At the close of business on April 18, 1997 (the "Closing"), the Northstar
International Value Fund ("International Value Fund") acquired the net assets of
the Brandes International Fund, pursuant to an Agreement of Reorganization dated
February 4, 1997. In accordance with the agreement, the International Value
Fund, at the closing, issued 4,152,725 shares of the International Value Fund
having an aggregate value of $41,569,860 which included unrealized appreciation
on investments of $4,321,823. As a result, the International Value Fund issued
1.637 shares for each Brandes International Fund Class A and 1.643 shares for
each Brandes International Fund Class C share. The transaction was structured
for tax purposes to qualify as a tax-free reorganization under the Internal
Revenue Code. Directly after the merger the combined net assets in the
International Value Fund were $41,569,860 with a net asset value of $10.00 for
Class A and Class C shares.
33
<PAGE>
[LOGO]
TRUST
