File No. 33-67852
811-7978
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 33
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 35
NORTHSTAR TRUST
(Exact name of Registrant as specified in charter)
TWO PICKWICK PLAZA, GREENWICH, CT 06830
(Address of Principal Executive Offices)
(203) 863-6200
(Registrant's telephone number)
MARK L. LIPSON
C/O NORTHSTAR INVESTMENT MANAGEMENT CORPORATION
TWO PICKWICK PLAZA, GREENWICH, CONNECTICUT 06830
(Name and address of agent for service)
Copies of all correspondence to:
JEFFREY STEELE, ESQ.
DECHERT, PRICE & RHOADS
1500 K STREET, N.W., SUITE 500
WASHINGTON, D.C. 20005
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
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<S> <C>
__ immediately upon filing pursuant to paragraph (b) X on January 1, 1998 pursuant
to paragraph (b)
__ 60 days after filing pursuant to paragraph (a)(1) __ on [date] pursuant
to paragraph (a)(1)
__ 75 days after filing pursuant to paragraph (a)(2) __ on [date]
pursuant to paragraph
(a)(2) of Rule 485
</TABLE>
If appropriate, check the following box:
__ This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
The enclosed materials relate only to the Northstar Emerging Markets Value Fund
which is a separate investment series of the Northstar Trust (the "Trust") and
do not amend in any respect the Trust's other investment series. Information
relating to the Trust's other investment series is contained in previously filed
Post-Effective Amendments.
FORM N-1A PART A ITEM PROSPECTUS CAPTION
1. Cover Page................... Cover Page
2. Synopsis..................... What you pay to invest
3. Condensed Financial
Information................ N/A
4. General Description of
Registrant.................. Cover Page; Objective; Investment Strategy;
Holdings; Risks; The Risks of Investing in
Mutual Funds; Investment Practices; The
Business of Mutual Funds; Where to Go For
More Information
5. Management of the Fund...... Meet the Portfolio Managers; The Business
of Mutual Funds
6. Capital Stock and Other
Securities.................. Buying, Selling and Exchanging; Choosing a
Share Class; Opening a Northstar Account;
Mutual Fund Earnings and your Taxes; Where
to Go for More Information
7. Purchases of Securities Being
Offered...................... Buying, Selling and Exchanging; Choosing a
Share Class; Opening a Northstar Account;
How Dealers are Compensated
8. Redemption or Repurchase.... Buying, Selling and Exchanging
9. Legal Proceedings........... Not Applicable
<PAGE>
CROSS REFERENCE SHEET
FORM N-1A PART B ITEM STATEMENT OF ADDITIONAL INFORMATION CAPTION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information & History Cover Page; Other Information
13. Investment Objectives & Policies Cover Page; Investment
Restrictions; Investment
Techniques
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal N/A
Holders of Securities
16. Investment Advisory and Services of Northstar, the
Other Services the Subadviser and the
Administrator
17. Brokerage Allocation and Portfolio Transactions and
Other Practice Brokerage Allocation
18. Capital Stock and Other Securities Purchases and Redemptions
19. Purchases, Redemptions and Net Asset Value; Purchases and
Pricing Redemptions
20. Tax Status Dividends, Distributions
and Taxes
21. Underwriter Underwriter and Distribution
Services
22. Calculation of Performance Data Performance Information
23. Financial Statements N/A
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
NORTHSTAR
EMERGING MARKETS
VALUE FUND
PROSPECTUS
January 1, 1998
[Star Graphic]
This prospectus contains important information about investing in the Northstar
Emerging Markets Value Fund. Please read the prospectus carefully before you
invest and keep it for future reference. Your investment is not a bank deposit,
is not insured or guaranteed by the FDIC, the Federal Reserve Board or any other
government agency, is affected by market fluctuations -- there is no guarantee
that the fund will achieve its objective. Like all mutual funds, these
securities have not been approved or disapproved by the Securities and Exchange
Commission or any state securities commission nor has the Securities and
Exchange Commission or any state securities commission passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
<PAGE>
WHAT'S
INSIDE
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[ICON] OBJECTIVES These pages contain a NORTHSTAR EMERGING MARKETS VALUE
description of the fund, including FUND 2
INVESTMENT its objective, investment strategy,
[ICON] STRATEGY types of holdings, risks and MEET THE PORTFOLIO MANAGERS 3
portfolio managers.
YOUR GUIDE TO BUYING, SELLING AND
[ICON] HOLDINGS You'll also find: EXCHANGING SHARES OF NORTHSTAR
FUNDS 5
[ICON] RISKS WHAT YOU PAY TO INVEST. A list of
the fees and expenses you pay -- MUTUAL FUND EARNINGS AND YOUR
WHAT both directly and indirectly -- TAXES 12
YOU PAY when you invest in the fund.
[ICON] TO INVEST THE BUSINESS OF MUTUAL FUNDS 13
THE RISKS OF INVESTING IN MUTUAL
HOW THE HOW THE FUND HAS PERFORMED. FUNDS 15
FUND HAS A chart that shows the fund's
[ICON] PERFORMED financial performance by share WHERE TO GO FOR MORE INFORMATION 18
class.
</TABLE>
<PAGE>
Registrant
NORTHSTAR Northstar Trust
EMERGING Portfolio managers
MARKETS Charles Brandes,
VALUE FUND Ian Sunder
OBJECTIVE [ICON]
This fund's investment objective is long-term capital appreciation.
INVESTMENT [ICON]
STRATEGY
The fund invests primarily in companies located in countries with emerging
markets.
The portfolio managers apply the technique of "value investing" by seeking
stocks that their research indicates are priced well below their long-term
value. This gives the fund both a possible margin of safety against price
declines and an opportunity for profit.
HOLDINGS [ICON] The fund holds primarily common stocks, preferred stocks,
American, European and Global depository receipts, shares of closed-end
investment companies, as well as convertible securities. It may also invest in
other higher-risk securities and engage in other investment practices. These are
described on page 15.
Under normal market conditions, it will invest at least 65% of its total assets
in securities of companies located in countries with emerging markets. Countries
with emerging markets include those countries that are generally considered to
be emerging countries by the international financial community. The fund may
invest the greater of either 20% of its assets in any one country or industry
or 150% of the weighting of such country or industry as represented in the
Morgan Stanley Capital International Emerging Markets Free (MSCI EMF) Index,
subject to any and all restrictions regarding industry concentration or
diversification requirements under the Investment Company Act.
RISKS [ICON]
Because it invests in equities, the fund is affected by changes in stock
markets. It is also subject to the risks associated with investing in smaller
companies, foreign securities and emerging markets. Please refer to the section
beginning on page 15, THE RISKS OF INVESTING IN MUTUAL FUNDS.
- --------------------------------------------------------------------------------
WHAT YOU PAY [ICON]
TO INVEST
There are two types of fees and expenses when you invest in mutual funds: fees,
including sales charges, you pay directly when you buy or sell shares, and
operating expenses paid each year by the fund.
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C
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Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none
Maximum deferred sales charge % none(1) 5.00(2) 1.00(2)
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C
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Management fee
after waiver or reimbursement(3) % 1.00 1.00 1.00
12b-1 fee(4) % 0.30 1.00 1.00
Other expenses
after waiver or reimbursement(3) % 0.50 0.50 0.50
TOTAL FUND OPERATING EXPENSES AFTER
REIMBURSEMENT (3) % 1.80 2.50 2.50
EXAMPLE
Here's an example of what you would pay in expenses if you invested $1,000,
reinvested all your dividends, the fund earned an average return of 5%, and
annual operating expenses remained at the current level. Keep in mind that this
is only an example -- actual expenses and performance may vary.
YEAR 1 YEAR 3 YEAR 5 YEAR 10
- ------------------------------------------------------------------------------
Class A
with redemption $ 65 101 140 249
..............................................................................
Class B
with redemption $ 75 108 153 266(5)
without redemption $ 25 78 133 266(5)
..............................................................................
Class C
with redemption $ 35 78 133 284
without redemption $ 25 78 133 284
..............................................................................
- -----------------
(1) Except for purchases of $1 million or more, when you sell any of the shares
within 18 months of when you bought them. Please see page 7 for details.
(2) This charge decreases over time. Please see page 7 for details.
- ------------------------------------
(3) The adviser, subadviser and administrator have agreed to waive or reimburse
fees until the net assets of the fund exceed $25 million or until April 1,
1998, whichever comes first. These figures reflect the reimbursement
of certain expenses by the adviser. Without reimbursement, management fee
would be 1.00% for Class A, Class B and Class C; it is estimated that other
expenses would be 0.70% for Class A, Class B and Class C; and total fund
operating expenses would be 2.00% for Class A and 2.70% for Class B and
Class C.
(4) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
- ------------------------------------
(5) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10.
2 Northstar Emerging Markets Value Fund
<PAGE>
MEET THE
PORTFOLIO
MANAGERS
CHARLES BRANDES
Charles Brandes has been co-manager of the Northstar Emerging Markets Value Fund
since its inception. Mr. Brandes has over 30 years of investment management
experience. He founded the general partner of Brandes Investment Partners, L.P.
in 1974 and owns a controlling interest in it. At Brandes Investment Partners,
L.P., he serves as a Managing Partner and senior member of the investment
committee.
Mr. Brandes earned his BA in Economics from Bucknell University. He is a
Chartered Financial Analyst and a member of the Association for Investment
Management and Research.
IAN SUNDER
Ian Sunder has been co-manager of the Northstar Emerging Markets Value Fund
since its inception. Mr. Sunder has over eight years of investment management
experience. At Brandes Investment Partners, L.P., he serves as an Assistant
Portfolio Manager and senior member of the investment committee.
Mr. Sunder earned his BA in Commerce from Karnatak University, India and his
Master of Accountants from Bowling Green State University. He is a Chartered
Financial Analyst and a member of the Association for Investment Management and
Research and the Financial Analysts Society.
Charles Brandes and Ian Sunder structure the portfolio of the Northstar Emerging
Markets Value Fund from a buy list determined by Brandes' Investment Committee,
of which they are senior members.
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SUB-ADVISER
BRANDES INVESTMENT PARTNERS, L.P.
A registered investment adviser, Brandes Investment Partners, L.P. serves as
subadviser to the Northstar Emerging Markets Value Fund. The company was formed
in May 1996 as the successor to its general partner, Brandes Investment
Partners, Inc. which has been (through various predecessor entities) providing
investment advisory services since 1974.
Brandes Investment Partners, L.P. currently manages over $15 billion in
international and global portfolios. Brandes Investment Partners, L.P. receives
a monthly fee for its services based on the average daily net assets of the
fund. This fee is paid by Northstar, and not the fund, at a rate of 50% of the
management fee that the fund pays Northstar.
[ICON]
If you have any questions, please call 1-800-595-7827.
3
<PAGE>
MEET THE
PORTFOLIO
MANAGERS
PERFORMANCE
PROFILE:
BRANDES
INVESTMENT PARTNERS
These figures demonstrate the historical track record of Brandes Investment
Partners, L.P. The figures have been provided by Brandes Investment Partners,
L.P. and have not been verified or audited. They do not indicate how the
Northstar Emerging Markets Value Fund or Brandes Investment Partners, L.P.
will perform in the future.
(a) The annual returns presented (right) were calculated on a time-weighted
and asset-weighted, total return basis, including reinvestment of all
dividends, interest and income, realized and unrealized gains or losses and
are net of applicable investment advisory fees, brokerage commissions,
custodial fees and execution costs and any applicable foreign withholding
taxes, without provision for federal and state income taxes, if any. This
total return method differs from the SEC method of calculating total return.
The Brandes Emerging Markets composite results include all actual,
fee-paying, fully discretionary Emerging Markets accounts under management by
Brandes Investment Partners, L.P. for at least one month beginning January 1,
1995 having substantially similar investment objectives, policies, techniques
and restrictions to those of the Northstar Emerging Markets Fund, other than
those accounts denominated in currencies other than U.S. dollars. The
weighted-average management fee during the period January 1, 1995 to December
31, 1996 was 0.98% per year. Securities transactions are accounted for on the
trade date. Cash and equivalents are included in performance results. For
calendar years 1995 and 1996, the Brandes Emerging Markets composite has been
examined by a Big Six accounting firm in accordance with AIMR Level II
verification standards. Copies of the report of independent accountants and a
complete list of and description of Brandes' composites are available upon
request. Brandes has prepared the performance data in compliance with the
Performance Presentation Standards for the Association for Investment
Management Research (AIMR-PPS-TM-). AIMR did not prepare or review this data.
The Fund agrees to conform the performance presentation to any changes in the
SEC staff position relating to prior performance presentations.
The charts below show the past performance of Brandes Investment Partners, L.P.
in managing accounts with investment objectives, policies, techniques and
restrictions substantially similar, though not identical to those of the
Northstar Emerging Markets Value Fund. The charts show average annual returns
for a composite of the actual performance of all emerging markets accounts
managed by Brandes Investment Partners from 1995 until the present.
The accounts were not subject to the same types of expenses as the fund or the
requirements of the Investment Company Act of 1940 or the Internal Revenue Code,
the limitations of which might have adversely affected performance results.
Included for comparison purposes are performance figures of the Morgan Stanley
Capital Emerging Markets Free ("MSCI EMF") Index, an unmanaged index consisting
of securities listed on exchanges in developing nations throughout the world. It
has been adjusted to reflect reinvestment of dividends. The results presented
below may not equate with the return experienced by any particular account as a
result of timing of investments and the effect of taxes on any client.
BRANDES EMERGING MSCI
MARKETS EQUITY EMF
COMPOSITE (%)(a) INDEX (%)
One year, ended
September 30, 1997 20.46 6.56
Average annual return since
December 31, 1994 13.18 2.75
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
BRANDES EMERGING MARKETS MSCI EMF
Equity Composite Index
BRANDES EMERGING MARKETS EQUITY COMPOSITE
-----------------------------------------
1Q95 0.97
2Q95 1.01
3Q95 1.04
4Q95 1.03
1Q96 1.07
2Q96 1.21
3Q96 1.17
4Q96 1.20
1Q97 1.32
2Q97 1.48
3Q97 1.41
MSCI EMF INDEX
--------------
1Q95 0.88
2Q95 0.97
3Q95 0.96
4Q95 0.95
1Q96 1.01
2Q96 1.05
3Q96 1.01
4Q96 1.01
1Q97 1.09
2Q97 1.18
3Q97 1.08
4
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
THERE ARE THREE STEPS TO TAKE WHEN YOU WANT TO BUY, SELL OR EXCHANGE SHARES OF
OUR FUNDS:
(bullet) first, choose a share class
(bullet) second, open a Northstar account and make your first investment
(bullet) third, choose one of several ways to buy, sell or exchange shares.
- --------------------------------------------------------------------------------
CHOOSING A
SHARE CLASS
The Northstar Emerging Markets Value Fund is available in Class A, Class B and
Class C shares.
The chart below summarizes the differences between the share classes -- your
choice of share class will depend on how much you are investing and for how
long. Large investments qualify for a reduced Class A sales charge and avoid the
higher distribution fees of classes B and C. Investments in Class B and Class C
shares don't have a front-end sales charge but there is a restriction on the
amount you can invest at one time. Your financial adviser can help you, or feel
free to call us for more information.
You'll find actual expenses charged to the fund beginning on page 2.
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Maximum CLASS A no limit
amount you CLASS B $500,000
can buy CLASS C $750,000
Front-end CLASS A yes, varies by size of investment
sales CLASS B none
charge CLASS C none
Deferred CLASS A only on investments of $1 million or more if you sell within
sales 18 months
CLASS B yes, if you sell within 5 years
charge CLASS C yes, if you sell within 1 years
Service CLASS A 0.25% per year
fee CLASS B 0.25% per year
0.25% per year
CLASS A 0.05% per year
Distribution CLASS B 0.75% per year
fee CLASS C 0.75% per year
Conversion CLASS B Class B shares convert to class A after 8 years
</TABLE>
[ICON]
If you have any questions, please call 1-800-595-7827.
5
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
FRONT-END SALES
CHARGES
(Class A shares only)
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AMOUNT RETAINED BY
YOUR INVESTMENT FRONT-END SALES CHARGE DEALERS
- ---------------------------------------------------------------------------------------------------
as a percentage as a percentage as a percentage
of your net investment of offering price of offering price
up to $100,000 4.99 4.75 4.00
$100,000 to $249,999 3.90 3.75 3.10
$250,000 to $499,999 2.83 2.75 2.30
$500,000 to $999,999 2.04 2.00 1.70
$1,000,000 and over -- -- --
</TABLE>
WAYS TO REDUCE FRONT-END SALES CHARGES
There are three ways you can reduce your sales charges.
1. TAKE ADVANTAGE OF PURCHASES YOU'VE ALREADY MADE
Rights of accumulation let you combine the value of all the Class A shares
you already own with your current investment to calculate your sales charge.
2. TAKE ADVANTAGE OF PURCHASES YOU INTEND TO MAKE
By signing a non-binding letter of intent, you can combine investments you
plan to make over a 13 month period to calculate the sales charge you'll pay
on each investment.
3. BUY AS PART OF A GROUP OF INVESTORS
You can combine your investments with others in a recognized group when
calculating your sales charge. The following is a general list of the groups
Northstar recognizes for this benefit.
(bullet) you, your spouse and your children under the age of 21
(bullet) a trustee or fiduciary for a single trust, estate or fiduciary account
(including qualifying pension, profit sharing and other employee
benefit trusts)
(bullet) any other organized group that has been in existence for at least six
months, and wasn't formed solely for the purpose of investing at a
discount.
4. YOU MAY NOT HAVE TO PAY FRONT-END SALES CHARGES OR A CDSC IF YOU ARE:
(bullet) an active or retired trustee, director, officer, partner or employee
(including immediate family) of
(bullet) Northstar or of any of its affiliated companies
(bullet) any Northstar affiliated investment company
(bullet) a dealer that has a sales agreement with the distributor
(bullet) a trustee or custodian of any qualified retirement plan or IRA
established for the benefit of anyone in the point above
(bullet) a dealer, broker or registered investment adviser who has entered into
an agreement with the distributor providing for the use of shares of
the fund in particular investment products such as "wrap accounts" or
other similar managed accounts for the benefit of your clients
(bullet) a service provider for Northstar, any Northstar affiliated company or
any Northstar affiliated investment company
(bullet) a Brandes employee, officer or partner
(bullet) a beneficiary of life insurance contracts with ReliaStar Life Insurance
Company (ReliaStar) or any ReliaStar affiliated life insurance company
to the extent you invest payments made to you under the contracts in
one or more Northstar Funds within sixty days of payment under the
contracts.
You won't pay a sales charge when you buy Class A shares of the fund through a
dealer by transferring the proceeds of the sale of another open-end fund, so
long as:
(bullet) you have held the shares in the fund you're selling for a least six
months, and you paid a sales charge when you bought them
(bullet) you send the proceeds of the sale directly to Northstar or our agent or
hold them in cash or a money market fund
(bullet) you buy the shares of the fund within 60 days of the sale, and
(bullet) the fund has the same or similar investment objective.
Pension, profit sharing and other benefit plans created pursuant to a plan
qualified under Section 401 of the Code or plans under Section 456 of the Code
don't pay a front-end sales charge or a CDSC, as long as the shares are
purchased by an employer sponsored plan with at least 50 eligible employees.
If you think you might be eligible to reduce your sales charges using any of
these methods, please call us or consult the Statement of Additional Information
(SAI).
6
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
DEFERRED SALES
CHARGES
(Classes A, B, & C)
We deduct a contingent deferred sales charge (CDSC) from the proceeds when you
sell shares as indicated below. CDSC is charged on the current market value of
the shares, or on the price you paid for them, whichever is less. You aren't
charged a CDSC on shares you acquired by reinvesting your dividends, or on
amounts representing appreciation.
When you ask us to sell shares, we will sell those that are exempt from the CDSC
first, and then sell the shares you have held the longest. This helps keep your
CDSC as low as possible.
CLASS A SHARES
There is generally no CDSC on Class A shares, except for purchases of $1 million
or more, when you sell them within 18 months of when you bought them.
YOUR INVESTMENT CDSC ON SHARES BEING SOLD
First $1,000,000 - $2,499,999 1.00%
$2,500,000 to $4,999,999 0.50%
$5,000,000 and over 0.25%
CLASS B & C SHARES
YEARS AFTER YOU
BOUGHT THE SHARES CLASS B CLASS C
1st year 5.00% 1.00%
2nd year 4.00% --
3rd year 3.00% --
4th year 2.00% --
5th year 2.00% --
after 5 years -- --
WHEN THE CDSC MIGHT BE WAIVED
We may waive the CDSC for Class B and Class C shares if:
(bullet) the shareholder dies or becomes disabled
(bullet) you're selling your shares through our systematic withdrawal program
(bullet) you're selling shares of a retirement plan and you are over 70 1/2
years old
(bullet) you're exchanging Class B or C shares for the same class of shares of
another Northstar fund
(bullet) you fall into any of the categories listed in point 4 on page 6.
If you think you might be eligible for a CDSC waiver, please call us or consult
the SAI.
[ICON]
If you have any questions, please call 1-800-595-7827.
7
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
OPENING A
NORTHSTAR
ACCOUNT
Once you've chosen the share class you prefer, you're ready to open an account.
First, determine how much money you want to invest. The minimum initial
investment for Northstar Funds is:
(bullet) $2,500 for non-retirement accounts
(bullet) $250 for retirement accounts
(bullet) $25 if you are investing using our automatic investment plan (see
page 10).
Next, open an account in one of two ways:
(bullet) give a check to your broker, who will open an account for you, or
(bullet) complete an application (you can obtain one from your financial adviser
or by calling us at 1-800-595-7827) and mail it to us, along with your
check made payable to Northstar Funds.
TAX-SHELTERED RETIREMENT PLANS
Call or write to us about opening your Northstar account as any one of the
following retirement plans:
(bullet) IRAs,
(bullet) SEP-IRAs,
(bullet) retirement and profit sharing plans for self-employed persons (Keogh),
(bullet) and corporate retirement plans (401(k)).
- --------------------------------------------------------------------------------
BUYING, SELLING
AND EXCHANGING
Once you've opened an account and made your first investment, you can choose one
of three ways to buy, sell or exchange shares of Northstar funds:
(bullet) through your broker
(bullet) directly, by mail or over the telephone
(bullet) using one of our automatic plans.
We'll send you a confirmation statement every time you make a transaction that
affects your account balance, except when we pay distributions.
Instructions for each option appear in the chart on page 10, but here are a few
things you should know before you begin.
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HOW SHARES ARE
PRICED
The price you pay or receive when you buy, sell or exchange shares is determined
by the fund's net asset value (NAV) per share and share class. NAV is calculated
each business day at the close of regular trading on the New York Stock Exchange
(usually 4:00 Eastern Standard Time) by dividing the net assets of each fund
class by the number of shares outstanding. To calculate NAV, we determine the
fair market value of the fund's portfolio securities using the method described
in the SAI.
When you're buying shares, you'll pay the NAV that is next calculated after we
receive your order in proper form, plus any sales charges that apply. When
you're selling shares, you'll receive the NAV that is next calculated after we
receive your order in proper form, less any deferred sales charges that apply.
- --------------------------------------------------------------------------------
SOME RULES FOR
BUYING
(bullet) The minimum amount of each investment after your first one is:
(bullet) $100 for non-retirement accounts
(bullet) $25 for retirement accounts
(bullet) $25 if you are investing using our automatic investment plan (see page
10).
(bullet) We record most shares on our books electronically. We will issue a
certificate if you ask us to in writing, however most of our
shareholders prefer not to have their shares in certificate form
because certificated shares can't be sold or exchanged by telephone or
using the systematic withdrawal program.
8
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
(bullet) We have the right to refuse a request to buy shares.
SOME RULES FOR
SELLING
(bullet) Selling your shares may result in a deferred sales charge. Please refer
to the table on page 7.
(bullet) We'll pay you within three days from the time we receive your request
to sell, unless you're selling shares you recently paid for by check.
In that case, we'll pay you when your check has cleared, which may take
up to 15 days.
(bullet) If you are a corporation, partnership, executor, administrator,
trustee, custodian, guardian or you are selling shares of a retirement
plan, you'll need to complete special documentation and give us your
request in writing. Please call us for information.
(bullet) You can reinvest part or all of the proceeds of any shares you sell
without paying a sales charge. You must let us know in writing 30 days
from the day you sold the shares, and buy the same class of shares you
sold. We will reimburse you for any CDSC you paid. Please see page 12
for information about how this can affect your taxes.
(bullet) You won't pay a service charge when you sell your shares, but your
dealer may charge you a fee.
(bullet) If selling shares results in the value of your account falling below
$500, we have the right to close your account, so long as your account
has been open for at least a year. We'll let you know 60 days in
advance, and if you don't bring the account balance above $500, we'll
sell your shares, mail the proceeds to you and close your account. We
may also close your account if you give us an incorrect social security
number or taxpayer identification number.
(bullet) In unusual circumstances, we may temporarily suspend the processing of
requests to sell.
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SOME RULES FOR
EXCHANGING
(bullet) When you exchange shares, you are selling shares of one fund and using
the proceeds to buy shares of another fund. Please see page 12 for
information about how this can affect your taxes.
(bullet) Before you make an exchange, be sure to request and read the sections
of the prospectus that discuss the shares you're exchanging to.
(bullet) You can exchange shares of any Northstar fund for the same class of
shares of any other Northstar fund, or for shares of the Cash
Management Fund of Salomon Brothers Investment Series (a money market
fund that's available through Northstar, but isn't one of the the
Northstar Funds) without a sales charge. You will, however, pay a
sales charge if you buy shares of the Cash Management Fund, and then
exchange them for Class A shares of any of the Northstar funds.
(bullet) For the purposes of calculating CDSC, shares you exchange will continue
to age from the day you first purchased them, even if you're
exchanging into the Cash Management Fund.
(bullet) We'll let you know 60 days in advance if we want to make any changes to
these rules.
[ICON]
If you have any questions, please call 1-800-595-7827.
9
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
- -------------------------------------------------------------------------------
WAYS TO BUY, SELL OR EXCHANGE WHEN TO USE THIS OPTION
- -------------------------------------------- ----------------------------------
THROUGH YOUR DEALER (bullet) buy
(bullet) sell
(bullet) exchange
- -------------------------------------------- ----------------------------------
BY MAIL
Please call us if you have any questions -- (bullet) buy
we can't process your request until we have (bullet) sell
all of the documents we need. (bullet) exchange
- -------------------------------------------- ----------------------------------
BY TELEPHONE
To sign up for this service, complete (bullet) sell
section 9 of the application or (bullet) exchange
call us at 1-800-595-7827.
- -------------------------------------------- ----------------------------------
AUTOMATIC INVESTMENT PLAN
To sign up for this service, complete (bullet) buy
section 7 of the application or call us at
1-800-595-7827.
- -------------------------------------------- ----------------------------------
SYSTEMATIC WITHDRAWAL PROGRAM
To sign up for this service, complete (bullet) sell
section 8 of the application or
call us at 1-800-595-7827.
10
<PAGE>
YOUR GUIDE TO BUYING,
SELLING AND EXCHANGING SHARES
OF NORTHSTAR FUNDS
HOW TO USE IT
- --------------------------------------------------------------------------------
If you're BUYING shares, make your check payable to Northstar Funds and give it
to your dealer, who will forward it to us.
When you're SELLING, give your written request to your dealer, who may charge
you a fee for this service.
- --------------------------------------------------------------------------------
Send your request to buy, sell or exchange in writing to:
Northstar Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 5131
Westborough MA 01581-5131
Your letter should tell us:
(bullet) your account number
(bullet) your social security number or taxpayer identification number
(bullet) the name the account is registered in
(bullet) the fund name and share class you're buying or selling, and, for
exchanges, the fund name and share class you're exchanging to
(bullet) the dollar value or number of shares you want to buy, sell or exchange.
If you're BUYING, include a check payable to Northstar Funds with your request.
If you're SELLING or EXCHANGING, your request must be signed by all registered
owners of the account.
We'll ask you to guarantee the signatures if:
(bullet) you are selling more than $50,000 worth of shares
(bullet) your address of record has changed in the past 30 days
(bullet) you want us to send the payment to someone other than the registered
owner, to an address other than the address of record, or in any form
other than by check.
Signatures can be guaranteed by a bank, a member of the national stock exchange
or another eligible institution.
- --------------------------------------------------------------------------------
You can SELL or EXCHANGE up to $50,000 of your shares by telephone.
Call us at 1-800-595-7827 between 8:30 a.m. and 4:00 pm Eastern Standard Time.
When you're calling with your request, we'll ask you for your name, social
security number, broker of record or other identification. If we don't ask for
these things and process an unauthorized telephone transaction, we are
responsible for any losses to your account. Otherwise you are responsible for
any unauthorized use of the telephone transaction service.
We'll mail the proceeds of the sale to the address of record or wire $1,000 or
more to any commercial bank in the U.S. that is a member of the Federal Reserve
System. There is no fee for this service.
- --------------------------------------------------------------------------------
You can authorize us to automatically withdraw a minimum of $25 each month from
your bank account and use it to buy shares in Northstar funds.
There's no charge for this service, but your bank may charge you a small set-up
or transaction fee. You can cancel the program at any time.
- --------------------------------------------------------------------------------
You can ask us to automatically transfer money from your Northstar account into
your bank account.
We will sell shares or share fractions on your behalf monthly or quarterly, and
automatically deposit the proceeds into your bank account. There may be a sales
charge on shares we sell on your behalf.
You must have at least $5,000 worth of shares in your account to participate in
this program. The minimum transfer amount is $25.
It isn't to your advantage to buy and sell shares of the same fund at the same
time, so you can't set up a systematic withdrawal program for an account you've
already signed up on an automatic investment plan.
[ICON]
If you have any questions, please call 1-800-595-7827.
11
<PAGE>
MUTUAL FUND
EARNINGS AND
YOUR TAXES
HOW THE FUND
PAYS DISTRIBUTIONS
The fund distributes virtually all of its net investment income and net capital
gains to shareholders once a year in the form of dividends.
As a shareholder, you are entitled to a share of the income and capital gains
the fund distributes. The amount you receive is based on the number of shares
you own.
DISTRIBUTION OPTIONS
You can take your distributions as cash or reinvest them in the same class of
shares of any of our funds. You specify your preference when you open your
account.
You can choose to reinvest your distrubtions in one of three ways:
(bullet) reinvest both income dividends and capital gain distributions to buy
additional Class A, B or C shares of any Northstar fund you choose
(bullet) receive income dividends in cash and reinvest capital gain
distributions to buy additional Class A, B or C shares of any Northstar
fund you choose
(bullet) receive both income dividends and capital gain distributions in cash.
You can change your distribution instructions at any time by notifying us by
phone (if going to the address of record), or in writing.
If you don't specify how you would like to receive your distributions, we'll
automatically reinvest both income dividends and capital gain distributions in
additional shares of the same fund.
- --------------------------------------------------------------------------------
HOW YOUR
DISTRIBUTIONS
ARE TAXED
The fund intends to meet the requirements for being a tax-qualified regulated
investment company, which means it generally does not pay federal income tax on
the earnings it distributes to shareholders.
As a result, distributions that you receive will generally be considered to be
taxable in your hands. Income distributions, whether you take them as cash or
reinvest them, are taxable as ordinary income. Capital gain distributions are
taxable as long-term capital gains, regardless of how long you've held the
shares.
Distributions may also be subject to state, local or foreign taxes.
If income distributed to you includes dividends paid by U.S. corporations, part
of the dividends the fund pays may be eligible for the corporate
dividends-received deduction.
TIMING YOUR PURCHASE
If you buy shares of the fund just before it makes a distribution, you will pay
the full price but part of your investment will come back to you as a taxable
distribution. Unless you are investing in a tax-deferred account, such as an
IRA, this is not to your advantage because you'll pay tax on the dividend but
will not have shared in the increase in the net asset value of the fund.
WHEN DISTRIBUTIONS ARE DECLARED
For tax purposes, distributions declared by the fund in October, November or
December and paid to you in January are taxable in the calendar year in which
they were declared.
BACKUP WITHHOLDING TAX
We'll notify you each year of the tax status of dividends and distributions. If
we don't have your tax identification number, or if you have been told by the
IRS that you are subject to backup withholding tax, we may be required to
withhold U.S. federal income tax on any distributions at the rate of 31%.
WHEN YOU SELL YOUR SHARES
When you sell or exchange shares you will realize a capital gain or loss,
depending on the difference between what your shares cost you and what you
receive for them. A capital gain or loss will be long-term or short-term,
depending on the length of time you held the shares.
In your federal income tax return you report a capital gain as income and a
capital loss as a deduction.
CONSULT YOUR TAX ADVISER
The information above is general in nature. You should consult your tax adviser
to discuss how investing in Northstar funds affects your personal tax situation.
12
<PAGE>
THE BUSINESS
OF MUTUAL
FUNDS
HOW THE FUND
IS ORGANIZED
AND MANAGED
The Northstar Emerging Markets Value Fund is a diversified mutual fund. It is a
series of the Northstar Trust (formerly the Northstar Advantage Trust), which is
registered as an investment company with the SEC.
The trustees oversee the business affairs of the fund and are responsible for
major decisions about the fund's investment objective and policies.
The fund does not hold regular shareholder meetings, but may hold special
meetings. A special meeting is called if investors holding at least 10% of the
outstanding shares of the fund request it. Certain objectives and policies of
the fund may only be changed by shareholder vote. A shareholder vote is required
to change the investment objective of a Northstar fund because the fund
investment objectives are fundamental.
The day-to-day management of the fund is handled by the following companies and
advisers appointed by the trustees:
INVESTMENT ADVISER
Oversees the investment management of the subadviser for the fund and provides
advice and recommendations about investments made by the fund. The investment
adviser is paid out of the fund's management fee, which is listed on page 2.
Northstar Investment Management Corporation
Two Pickwick Plaza
Greenwich, CT 06830
ADMINISTRATOR
Provides administrative, compliance and accounting services to the fund. The
administrator receives an annual administrative services fee from the fund of
0.10% of the fund's average daily net assets, plus $5 per account per year.
Northstar Administrators Corporation
Two Pickwick Plaza
Greenwich, CT 06830
DISTRIBUTOR
Markets the fund and distributes shares through brokers and other financial
representatives.
Northstar Distributors, Inc.
Two Pickwick Plaza
Greenwich, CT 06830
CUSTODIAN
Holds all the fund's assets.
Custodian and fund accounting agent:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
TRANSFER AGENT
Handles shareholder record-keeping and statements, distribution of dividends and
processing of orders to buy and sell shares.
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 01581-5120
PORTFOLIO MANAGERS AND SUBADVISER
You'll find profiles of the fund's portfolio managers and subadviser beginning
on page 3.
[ICON]
If you have any questions, please call 1-800-595-7827.
13
<PAGE>
THE BUSINESS
OF MUTUAL
FUNDS
HOW DEALERS ARE
COMPENSATED
Dealers receive payment for selling shares of the Northstar Emerging Markets
Value Fund in three ways:
THEY RECEIVE A COMMISSION WHEN
YOU BUY SHARES
The amount of the commission depends on the amount you invest and the share
class you buy. Sales commissions are detailed in the chart below.
(bullet) CLASS A INVESTMENTS
(% OF OFFERING PRICE)
COMMISSION AMOUNT
RECEIVED BY DEALERS PAID
OUT OF SALES CHARGES BY THE
YOU PAY DISTRIBUTOR
up to $100,000 4.00 --
$100,000 to $249,999 3.10 --
$250,000 to $499,999 2.30 --
$500,000 to $999,999 1.70 --
$1,000,000 to -- 1.00
$2,499,999
$2,500,000 to -- 0.50
$4,999,999
$5,000,000 and over -- 0.25
(bullet) CLASS B INVESTMENTS
Receives 4% of sale price from the distributor
(bullet) CLASS C INVESTMENTS
Receives 1% of sale price from the distributor
THEY ARE PAID A FEE BY THE DISTRIBUTOR
FOR SERVICING YOUR ACCOUNT
They receive a service fee depending on the average net asset value of the class
of shares their clients hold in the fund. These fees are paid from the 12b -1
fee deducted from each fund class. In addition to covering the cost of
commissions and service fees, the 12b -1 fee is used to pay for other expenses
such as sales literature, prospectus printing and distribution and compensation
to the distributor and its wholesalers. You'll find the 12b -1 fees listed in
the fund information on page 2. Service and distribution fee percentages appear
on page 5.
THEY MAY RECEIVE ADDITIONAL BENEFITS
AND REWARDS
Selling shares of the fund may make dealers eligible for awards or to
participate in sales programs sponsored by Northstar. The costs of these
benefits and rewards are not deducted from the assets of the fund -- they are
paid from the distributor's own resources.
The distributor may also pay additional compensation to dealers including
Advest, Inc. out of its own resources for marketing and other services to
shareholders.
14
<PAGE>
THE RISKS OF
INVESTING IN
MUTUAL FUNDS
Risk is the potential that your investment will lose money or not earn as much
as you hope. Mutual funds have varying degrees of risk, depending on the
securities they invest in. There is no guarantee that a fund will achieve its
investment objective.
You'll find a discussion of the key risk factors associated with the fund on
page 2.
This section provides information about the risks associated with different
kinds of securities. It also lists additional investment practices that may
involve elements of risk.
- --------------------------------------------------------------------------------
EQUITIES
(bullet) Give the buyer ownership rights in the issuer. Common and preferred
stocks, convertible securities and stock purchase rights are types of
equities.
(bullet) The market value of an equity security may go up or down rapidly
depending on market conditions. This affects the value of the shares of
a fund, and the value of your investment.
(bullet) Securities of smaller companies may be subject to more abrupt or
erratic market movements because they are traded in lower volume and
are subject to greater changes in earnings and growth prospects.
- --------------------------------------------------------------------------------
FOREIGN
INVESTMENTS
(bullet) Securities issued by companies located in foreign countries.
(bullet) Subject to all of the risks associated with equity securities. There
are also other risks that can affect the value of foreign investments:
(bullet) foreign markets may be less regulated, may have less volume and be less
liquid
(bullet) foreign securities may be less liquid and subject to greater price
fluctuations
(bullet) the value of the securities are affected by changes in currency
exchange rates and exchange control regulations
(bullet) brokerage and custodial fees are generally higher
(bullet) the value of foreign securities may be affected by adverse political
and economic developments, seizure or nationalization of foreign
deposits, and government restrictions
(bullet) there is often less information available about foreign companies and
many countries do not have the accounting, auditing and financial
reporting that we have in the United States and foreign financial
institutions may be subject to less regulation and supervision.
EMERGING MARKETS
(bullet) Investment in emerging markets have additional risks: developing
countries have economic structures that are less mature, they have
less stable political systems and may have high inflation, rapidly
changing interest and currency exchange rates, greater risks of
currency devaluation and their securities markets and securities
transaction settlement procedures are substantially less developed.
Risks of foreign investing are accentuated in emerging markets.
DEPOSITORY RECEIPTS
(bullet) American Depository Receipts ("ADRs") are typically issued by U.S.
banks or trust companies. They are based on ownership of securities
issued by foreign companies, and are traded on U.S. exchanges. European
Depository Receipts ("EDRs") and Global Depository Receipts ("GDRs")
are typically issued by foreign banks or trust companies, although they
also may be issued by U.S. banks or trust companies. They are based on
ownership of securities issued by foreign or U.S. companies, and are
traded on stock exchanges around the world.
[ICON]
If you have any questions, please call 1-800-595-7827.
15
<PAGE>
THE RISKS OF
INVESTING IN
MUTUAL FUNDS
- -------------------------------------------------------------------------------
OTHER, HIGHER
RISK SECURITIES
ILLIQUID SECURITIES -- FUND IS LIMITED TO 5% OF NET ASSET VALUE
(bullet) Securities that can't be sold quickly at a reasonable price, or that
can't be sold on the open market. Includes restricted securities and
private placements.
(bullet) Used to realize higher profits.
(bullet) There may be fewer market players which can result in lower prices and
sales can take longer to complete.
(bullet) Following guidelines established by the trustees of the fund, Brandes
may consider a security that can't be sold on the open market to be
liquid if it can be sold to institutional investors or on foreign
markets.
DERIVATIVE SECURITIES
(bullet) The fund does not currently intend to make use of any derivatives,
including transactions in currency forwards for hedging purposes.
- --------------------------------------------------------------------------------
INVESTMENT
PRACTICES
REPURCHASE AGREEMENTS -- FUND IS LIMITED TO 15% OF NET ASSET VALUE
(bullet) Buying a security from a bank or dealer who must buy it back at a fixed
price on a specified day. Repurchase agreements that mature after more than
seven days are considered to be illiquid investments. Investments in this type
of repurchase agreement can only be 5% of the fund's net asset value.
(bullet) Used for temporary defensive purposes or to generate income from cash
balances.
(bullet) The bank or dealer may not be able to buy back the security.
SHORT-TERM TRADING -- NO LIMIT
(bullet) Selling a security soon after you buy it.
(bullet) Used when the fund needs to be more liquid, in response to changes in
interest rates and economic or other developments, or when a security
has reached its price or yield objective.
(bullet) May result in higher costs for brokerage commissions, dealer mark-ups
and other transaction costs, as well as taxable capital gains.
TEMPORARY INVESTMENTS -- NO LIMIT
(bullet) Temporarily maintaining part or all of the fund's assets in cash or in
U.S. Government securities, commercial paper, banker's acceptances,
repurchase agreements and certificates of deposit.
(bullet) Used for temporary and defensive purposes in periods of unusual market
conditions.
(bullet) Provides lower returns.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS -- NO LIMIT
(bullet) A commitment to buy a security on a specific day in the future at a
specified price.
(bullet) Used to realize short-term profits.
(bullet) If made through a dealer, there is a risk that the dealer won't
complete the sale, and that the fund will lose out on a good yield or
price.
(bullet) There is also risk that the value of the security will change before
the transaction is settled, resulting in short-term losses instead of
gains.
CLOSED-END INVESTMENT COMPANIES -- FUND IS LIMITED TO 10% OF TOTAL ASSETS
(bullet) An investment company whose shares are listed on a stock exchange or
are traded in the over-the-counter market.
16
<PAGE>
THE RISKS OF
INVESTING IN
MUTUAL FUNDS
INVESTMENT
PRACTICES
CLOSED-END INVESTMENT COMPANIES -- FUND IS LIMITED TO 10% OF TOTAL ASSETS
(bullet) Used to invest in securities markets of certain countries where
restrictions on direct investment by foreign entities would otherwise
limit the fund's ability to invest in the securities markets of such
countries, or to generate income from cash balances.
(bullet) The fund will indirectly bear its proportionate share of any fees and
expenses of such companies, in addition to the fund's fees and
expenses.
[ICON]
If you have any questions, please call 1-800-595-7827.
17
<PAGE>
WHERE TO GO
FOR MORE
INFORMATION
You'll find more information about the Northstar Emerging Markets Value Fund in
our:
ANNUAL REPORT
The Annual report contains information about fund performance, the financial
statements and the auditor's reports. Because this is a new fund, its Annual
report won't be available until December 1998.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains complete information about the Northstar Funds. The SAI is
legally part of this prospectus (it is incorporated by reference). A copy has
been filed with the Securities and Exchange Commission.
Please write or call for a free copy of the Annual report or the current SAI:
The Northstar Funds
2 Pickwick Plaza
Greenwich, CT 06830
1-800-595-7827
18
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1998
NORTHSTAR EMERGING MARKETS VALUE FUND
TWO PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
(203) 863-6200
(800) 595-7827
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Fund dated January 1, 1998, as each may be revised from time to time. To obtain
a copy of the Fund's Prospectus, please contact Northstar Investment Management
Corporation at the address or phone number listed above.
Northstar Investment Management Corporation ("Northstar" or the "Adviser")
serves as the Fund's investment adviser. Northstar has engaged Brandes
Investment Partners, L.P. ("Brandes" or the "Subadviser") to serve as subadviser
to the Northstar Emerging Markets Value Fund, subject to the supervision of
Northstar. Northstar Distributors, Inc. (the "Underwriter") is the underwriter
to the Fund. Northstar Administrators Corporation (the "Administrator") is the
Fund's administrator. The Underwriter and the Administrator are affiliates of
Northstar.
--------------------------------------
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS................................................. -
INVESTMENT TECHNIQUES................................................... -
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION......................... _
SERVICES OF NORTHSTAR, THE SUBADVISER
AND THE ADMINISTRATOR................................................... -
NET ASSET VALUE......................................................... -
PURCHASES AND REDEMPTIONS............................................... -
DIVIDENDS, DISTRIBUTIONS AND TAXES...................................... -
UNDERWRITER AND DISTRIBUTION SERVICES................................... -
TRUSTEES AND OFFICERS................................................... -
OTHER INFORMATION....................................................... -
PERFORMANCE INFORMATION................................................. -
FINANCIAL STATEMENTS.................................................... -
<PAGE>
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
NORTHSTAR EMERGING MARKETS VALUE FUND. The Fund has adopted investment
restrictions numbered 1 through 6 as fundamental policies. These restrictions
cannot be changed without approval by the holders of a majority of the Fund's
outstanding voting shares (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")). Investment restrictions numbered 7 through 12 are not
fundamental policies and may be changed by vote of a majority of the Trust's
Board members at any time. The Fund may not:
1. Issue senior securities, except to the extent permitted under the
Investment Company Act of 1940, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 10% of
its total assets (not including the amount borrowed), provided that it will not
make investments while borrowings in excess of 5% of the value of its total
assets are outstanding;
2. Act as underwriter (except to the extent the Fund may be deemed to be an
underwriter in connection with the sale of securities in its investment
portfolio);
3. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities), except that the Fund reserves the right to invest all of
its assets in shares of another investment company;
4. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although the Fund may purchase and sell securities which
are secured by real estate, securities of companies which invest or deal in real
estate and securities issued by real estate investment trusts);
5. Purchase or sell commodities or commodity futures contracts, except that
the Fund may purchase and sell stock index futures contracts for hedging
purposes to the extent permitted under applicable federal and state laws and
regulations and except that the Fund may engage in foreign exchange forward
contracts;
6. Make loans (except for purchases of debt securities consistent with the
investment policies of the Fund and except for repurchase agreements and loans
of portfolio securities);
7. Make short sales of securities or maintain a short position, except for
short sales against the box;
8. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions;
9. Write put or call options, except that the Fund may (i) write covered
call options on individual securities and on stock indices; (ii) purchase put
and call options on securities which are eligible for purchase by the Fund and
on stock indices; and (iii) engage in closing transactions with respect to its
options writing and purchases, in all cases subject to applicable federal and
state laws and regulations;
<PAGE>
10. Purchase any security if as a result the Fund would then hold more than
10% of any class of voting securities of an issuer (taking all common stock
issues as a single class, all preferred stock issues as a single class, and all
debt issues as a single class), except that the Fund reserves the right to
invest all of its assets in a class of voting securities of another investment
company;
11. Invest more than 10% of its assets in the securities of other
investment companies or purchase more than 3% of any other investment company's
voting securities or make any other investment in other investment companies
except as permitted by federal and state law, except that the Fund reserves the
right to invest all of its assets in another investment company;
12. Invest more than 15% of its net assets in illiquid securities.
INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
DERIVATIVE INSTRUMENTS. The Fund may invest in Derivative Instruments for a
variety of reasons, including to enhance return, hedge certain market risks, or
provide a substitute for purchasing or selling particular securities.
Derivatives may provide a cheaper, quicker or more specifically focused way for
the Fund to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit a Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., margin requirements) operated by
the clearing agency in order to reduce overall credit risk. As a result, unless
the clearing agency defaults, there is relatively little counterparty credit
risk associated with Derivatives purchased on an exchange. By contrast, no
clearing agency guarantees over-the-counter Derivatives. Therefore, each party
to an over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, Northstar and the Subadviser will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Fund. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
FUTURES TRANSACTIONS - IN GENERAL. The Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London International
Financial Futures Exchange and the Sydney Futures Exchange Limited. Foreign
markets may offer advantages such as trading opportunities or arbitrage
possibilities not
<PAGE>
available in the United States. Foreign markets, however, may have greater risk
potential than domestic markets. For example, some foreign exchanges are
principal markets so that no common clearing facility exists and an investor may
look only to the broker for performance of the contract. In addition, any
profits that the Fund might realize in trading could be eliminated by adverse
changes in the exchange rate, or the Fund could incur losses as a result of
those changes. Transactions on foreign exchanges may include both commodities
which are traded on domestic exchanges and those which are not. Unlike trading
on domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Fund which
could adversely affect the value of the Fund's net assets. Although the Fund
intends to purchase or sell futures contracts only if there is an active market
for such contracts, no assurance can be given that a liquid market will exist
for any particular contract at any particular time. Many futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant market,
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if the Fund uses
futures to hedge against the possibility of a decline in the market value of
securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission (the "SEC"), the Fund may be required to segregate cash or
high quality money market instruments in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of limiting the
Fund's ability to otherwise invest those assets.
SPECIFIC FUTURES TRANSACTIONS. The Fund may purchase and sell stock index
futures contracts. A stock index future obligates the Fund to pay or receive an
amount of cash equal to a fixed dollar amount specified in the futures contract
multiplied by the difference between the settlement price of the contract on the
contract's last trading day and the value of the index based on the stock prices
of the securities that comprise it at the opening of trading in such securities
on the next business day.
The Fund may purchase and sell interest rate futures contracts. An interest
rate future obligates the Fund to purchase or sell an amount of a specific debt
security at a future date at a specific price.
<PAGE>
The Fund may purchase and sell currency futures. A foreign currency future
obligates the Fund to purchase or sell an amount of a specific currency at a
future date at a specific price.
The Fund will engage in futures transactions only as a hedge against the
risk of unexpected changes in the values of securities held or intended to be
held by the Fund. As a general rule, the Fund will not purchase or sell futures
if, immediately thereafter, more than 25% of its net assets would be hedged. In
addition, the Fund will not purchase or sell futures or related options if,
immediately thereafter, the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for such options would exceed 5% of
the market value of the Fund's net assets.
OPTIONS - IN GENERAL. The Fund may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period.
A covered call option written by the Fund is a call option with respect to
which the Fund owns or has the right to acquire the underlying security or
otherwise covers the transaction by segregating cash or liquid securities. A put
option written by the Fund is covered when, among other things, cash or liquid
securities having a value equal to or greater than the exercise price of the
option are placed in a segregated account with the Fund's custodian to fulfill
the obligation undertaken. The principal reason for writing covered call and put
options is to realize, through the receipt of premiums, a greater return than
would be realized on the underlying securities alone. The Fund receives a
premium from writing covered call or put options which it retains whether or not
the option is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. The Fund may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of specific
securities) or stock indices listed on national securities exchanges or traded
in the over-the-counter market. An option on a stock index is similar
<PAGE>
to an option in respect of specific securities, except that settlement does not
occur by delivery of the securities comprising the index. Instead, the option
holder receives an amount of cash if the closing level of the stock index upon
which the option is based is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. Thus, the effectiveness
of purchasing or writing stock index options will depend upon price movements in
the level of the index rather than the price of a particular stock.
The Fund may purchase and sell call and put options on foreign currency.
These options convey the right to buy or sell the underlying currency at a price
which is expected to be lower or higher than the spot price of the currency at
the time the option is exercised or expires.
The Fund may purchase cash-settlement options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps in
pursuit of its investment objective. Interest rate swaps involve the exchange by
the Fund with another party of their respective commitments to pay or receive
interest (for example, an exchange of floating-rate payments for fixed-rate
payments) denominated in U.S. dollars or foreign currency. Equity index swaps
involve the exchange by the Fund with another party of cash flows based upon the
performance of an index or a portion of an index of securities which usually
includes dividends. A cash-settlement option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated transactions
from financial institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability of
Northstar and the Subadviser to predict correctly movements in the prices of
individual stocks, the stock market generally, foreign currencies or interest
rates. To the extent the Manager's predictions are incorrect, the Fund may incur
losses.
SHORT SALES. The Fund may make short sales "against the box." A short-sale
is a transaction in which a party sells a security it does not own in
anticipation of decline in the market value of that security. A short sale is
"against the box" to the extent that the Fund contemporaneously owns or has the
right to obtain securities identical to those sold short. When the Fund makes a
short sale, it must borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Fund may
have to pay a fee to borrow particular securities, and is often obligated to pay
over any accrued interest on such borrowed securities.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a
Fund buys a money market instrument and obtains a simultaneous commitment from
the seller to repurchase the instrument at a specified time and at an agreed
upon price. Northstar and the Subadviser will use standards set by the Fund's
Trustees in reviewing the creditworthiness of parties to repurchase agreements
with the Fund. In addition, no more than an aggregate of 5% of the Fund's net
assets, at the time of investment, will be invested in illiquid investments,
including repurchase agreements having maturities longer than seven days. In the
event of failure of the executing bank or broker-dealer, the Fund could
experience some delay in obtaining direct ownership of the
<PAGE>
underlying collateral and might incur a loss if the value of the security should
decline, as well as costs in disposing of the security.
LENDING PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
broker-dealers and other financial institutions in an amount up to 30% of the
value of its total assets, provided that such loans are callable at any time by
the Fund and are at all times secured by collateral held by the Fund at least
equal to the market value, determined daily, of the loaned securities. The Fund
will continue to receive any income on the loaned securities, while
simultaneously earning interest on cash collateral (which will be invested in
short-term debt obligations) or a securities lending fee (in the case of
collateral in the form of U.S. Government securities).
There may be risks of delay in recovery of the loaned securities and, in
some cases, loss of rights in the collateral should the borrower of the
securities fail financially. Loans of portfolio securities will only be made to
firms considered by Northstar or the Subadviser to be creditworthy under
guidelines adopted by the Trustees.
WHEN-ISSUED SECURITIES. The Fund may purchase securities on a when-issued
or delayed delivery basis. In such transactions, the price is fixed at the time
the commitment to purchase is made, but delivery and payment for the securities
take place at a later date, normally within one month. The value of the security
on the settlement date may be more or less than the price paid as a result of,
among other things, changes in the level of interest rates or other market
factors. Accordingly, there is a risk of loss, which is in addition to the risk
of decline in the value of the Fund's other assets. The Fund will establish a
segregated account with its custodian in which it will maintain cash and
marketable securities equal in value to commitments for when-issued or delayed
delivery securities. While when-issued or delayed delivery securities may be
sold prior to the settlement date, it is intended that the Fund will purchase
such securities with the purpose of actually acquiring them, unless a sale
appears desirable for investment reasons.
RISKS OF INTERNATIONAL INVESTING. The Fund may invest up to 100% of its
total assets in securities of foreign issuers. Investments in foreign securities
involve special risks, including currency fluctuations, political or economic
instability in the country of issue and the possible imposition of exchange
controls or other laws or restrictions. In addition, securities prices in
foreign markets are generally subject to different economic, financial,
political and social factors than are the prices of securities in U.S. markets.
With respect to some foreign countries there may be the possibility of
expropriation or confiscatory taxation, limitations on liquidity of securities
or political or economic developments which could affect the foreign investments
of a Fund. Moreover, securities of foreign issuers generally will not be
registered with the SEC, and such issuers will generally not be subject to the
SEC's reporting requirements. Accordingly, there is likely to be less publicly
available information concerning certain of the foreign issuers of securities
held by the Fund than is available concerning U.S. companies. Foreign companies
are also generally not subject to uniform accounting, auditing and financial
reporting standards or to practices and requirements comparable to those
applicable to U.S. companies. There may also be less government supervision and
regulation of foreign broker-dealers, financial institutions and listed
companies that exists in the U.S. Commission rates in foreign countries, which
are generally fixed rather than subject to negotiation as in the U.S., are
<PAGE>
likely to be higher. These factors could make foreign investments, especially
those in developing countries, more volatile. All of the above issues should be
considered before investing in the Fund.
EMERGING MARKETS AND RELATED RISKS. The Fund may invest primarily in
securities of compaies located in countries with emerging securities markets.
Emerging markets are the capital markets of any country that in the opinion of
Brandes is generally considered a developing country by the international
financial community. Currently, these markets include, but are not limited to,
the markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt,
Greece, Hong Kong, Hungary, India, Indonesia, Jordan, Malaysia, Mexico,
Pakistan, Peru, Philippines, Poland, Portugal, Russia, Singapore, South Africa,
Thailand, Turkey, Venezuela and Zaire. As opportunities to invest in other
emerging markets countries develop, the Fund expects to expand and diversify
further the countries in which it invests.
Investing in emerging market securities involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
markets countries may have fixed or managed currencies that are not
free-floating against the U.S. dollar. Further, certain currencies may not be
traded internationally. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base, governmental controls and investment restrictions that are subject to
political change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries.
Emerging securities markets typically have substantially less volume than
U.S. markets, securities in many of such markets are less liquid, and their
prices often are more volatile than securities of comparable U.S. companies.
Such markets often have different clearance and settlement procedures for
securities transactions, making it difficult to conduct transactions. Delays in
settlement could result in temporary periods when assets which the Fund desires
to invest in emerging markets may be uninvested. Settlement problems in emerging
markets countries also could cause the Fund to miss attractive investment
opportunities. Satisfactory custodial services may not be available in some
emerging markets countries, which may result in the Fund incurring additional
costs and delays in the transportation and custody of such securities.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in loan
participations and loan assignments. A Fund's investment in loan participations
typically will result in the Fund having a contactual relationship only with the
lender and not with the borrower. The Fund will have the right to receive
payments of principal, interest and any fees to which it is entitled only from
the lender selling the participations and only upon receipt by the lender of the
payments from the borrower. In
<PAGE>
connection with purchasing participations, the Fund generally will have no right
to enforce compliance by the borrower with the terms of the loan agreement
relating to the loan, nor any right of set-off against the borrower, and the
Fund may not directly benefit from any collateral supporting the loan in which
it has purchased the participation. In the event of the insolvency of the lender
selling a participation, the Fund may be treated as a general creditor of the
lender and may not benefit from any set-off between the lender and the borrower.
When a Fund purchases a loan assignment from lenders, it will acquire
direct rights against the borrowers on the loan. Because assignments are
arranged through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by the Fund as the
purchaser of an assignment may differ from, and be more limited than, those held
by the assigning lender. Because there is no liquid market for such securities,
the Fund anticipates that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market may have an
adverse impact on the value of such securities and a Fund's ability to dispose
of particular assignments or participations when necessary to meet redemptions
of Fund shares, to meet the Fund's liquidity needs or when necessary in response
to a specific economic event, such as deterioration in the creditworthiness of
the borrower. The lack of a liquid secondary market for assignments and
participations also may make it more difficult for a Fund to value these
securities for purposes of calculating its net asset value.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
- --------------------------------------------------------------------------------
Northstar or the Subadviser may place orders for the purchase and sale of
the Fund's securities, supervise their execution and negotiate brokerage
commissions on behalf of the Fund. For purposes of the remainder of this
section, "PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION", discussion of
Northstar includes the Subadviser. It is the practice of Northstar to seek the
best prices and best execution of orders and to negotiate brokerage commissions
that in the Adviser's opinion, are reasonable in relation to the value of the
brokerage services provided by the executing broker. Brokers who have executed
orders for the Fund are asked to quote a fair commission for their services. If
the execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by Northstar, the rate is
deemed by Northstar to be reasonable. Brokers may ask for higher rates of
commission if all or a portion of the securities involved in the transaction are
positioned by the broker, if the broker believes it has brought the Fund an
unusually favorable trading opportunity, or if the broker regards its research
services as being of special value and payment of such commissions is authorized
by Northstar after the transaction has been consummated. If Northstar more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. Northstar believes
that the Fund benefits with a securities industry comprised of many and diverse
firms and that the long-term interest of shareholders of the Fund is best served
by its brokerage policies that include paying a fair commission, consistent with
best execution, rather than seeking to exploit its leverage to force the lowest
possible commission rate. Over-the-counter purchases and sales are transacted
directly with principal market-makers, except in those circumstances where, in
the opinion of Northstar, better prices and execution are available elsewhere.
<PAGE>
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry groups
and individual issues. Research services will vary from firm to firm, with
broadest coverage generally from the large full-line firms. Smaller firms, in
general, tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor federal,
state, local and foreign political developments; many of the brokers also
provide access to outside consultants. The outside research assistance is
particularly useful to Northstar's staff, since the brokers, as a group, tend to
monitor a broader universe of securities and other matters than Northstar's
staff can follow. In addition, the outside research provides Northstar with a
diverse perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to Northstar and is available for
the benefit of other accounts advised by Northstar and its affiliates; and not
all of this information will be used in connection with the Fund. While this
information may be useful in varying degrees and may tend to reduce Northstar's
expenses, it is not possible to estimate its value, and, in the opinion of
Northstar, it does not reduce Northstar's expenses by a determinable amount. The
extent to which Northstar makes use of statistical, research and other services
furnished by brokers is considered by Northstar in the allocation of brokerage
business, but there is no formula by which such business is allocated. Northstar
does so in accordance with its judgment of the best interests of the Fund and
its shareholders.
Purchases and sales of fixed income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to dealers
serving as market makers for the securities at a net price. The Fund will also
purchase such securities in underwritten offerings and will, on occasion,
purchase securities directly from the issuer. Generally, fixed income securities
are traded on a net basis and do not involve brokerage commissions. The cost of
executing fixed income securities transactions consists primarily of dealer
spreads and underwriting commissions.
In purchasing and selling fixed income securities, it is the policy of the
Fund to obtain the best results, while taking into account the dealer's general
execution and operational facilities, the type of transaction involved and other
factors, such as the dealer's risk in positioning the securities involved. While
Northstar generally seeks reasonably competitive spreads or commissions, the
Fund will not necessarily pay the lowest spread or commission available.
The Fund may, under circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer that has
provided statistical or other research services to the Fund. By allocating
transactions in this manner, Northstar is able to supplement its research and
analysis with the views and information of other securities firms.
A change in securities held in the portfolio of the Fund is known as
"Portfolio Turnover" and may involve the payment by the Fund of dealer mark-ups
or brokerage or underwriting commissions and other transaction costs on the sale
of securities, as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover rate for a fiscal year is the percentage
determined by dividing the lesser of the cost of purchases or proceeds from
sales of portfolio securities by the average of the value of portfolio
securities during such year, all excluding
<PAGE>
securities whose maturities at acquisition were one year or less. The Fund
cannot accurately predict its portfolio turnover rate, but Northstar anticipates
that the Fund's rate will not exceed 100% under normal market conditions. A 100%
annual turnover rate would occur, for example, if all the securities in the
portfolio were replaced once in a period of one year. The Fund's portfolio
turnover rate may be higher than that described above if the Fund finds it
necessary to significantly change its portfolio to adopt a temporary defensive
position or respond to economic or market events. A high turnover rate would
increase commission expenses and may involve realization of gains that would be
taxable to shareholders. The ability of the Fund to make purchases and sales of
securities and to engage in options and futures transactions will be limited by
certain requirements of the Internal Revenue Code of 1986, as amended (the
"Code").
The placement of portfolio transactions with broker-dealers who sell shares
of the Fund is subject to rules adopted by the National Association of
Securities Dealers, Inc. ("NASD").
The Fund does not effect securities transactions through broker-dealers in
accordance with any formula, nor does it effect securities transactions through
such broker-dealers solely for selling shares of the Fund. However, as stated
above, broker-dealers who execute transactions for the Fund may from time to
time effect purchases of shares of the Fund for their customers.
SERVICES OF NORTHSTAR, THE SUBADVISER AND THE ADMINISTRATOR
- --------------------------------------------------------------------------------
Pursuant to an Investment Advisory Agreement with the Northstar Trust (the
"Trust") on behalf of the Fund, Northstar acts as the investment adviser to the
Fund. In this capacity, Northstar, subject to the authority of the Trustees of
the Fund, and subject to delegation of certain responsibilities to Brandes
Investment Partners, L.P. as the Subadviser for the Fund, is responsible for
furnishing continuous investment supervision to the Fund and is responsible for
the management of the Fund's portfolio.
Northstar is an indirect, wholly-owned subsidiary of ReliaStar Financial
Corporation ("ReliaStar"). ReliaStar's address is 20 Washington Avenue South,
Minneapolis, Minnesota 55401. ReliaStar is a publicly traded holding company
whose subsidiaries specialize in the life insurance business. Through ReliaStar
Life Insurance Company and other subsidiaries, ReliaStar issues and distributes
individual life insurance and annuities, group life and health insurance and
life and health reinsurance, and provides related investment management
services.
Northstar charges a fee under the advisory agreement to the Fund at an
annual rate of 1.00% of the Fund's average daily net assets. This fee is accrued
daily and payable monthly. The Investment Advisory Agreement for the Fund dated
November 8, 1997 was originally approved by the Trustees of the Trust on behalf
of the Fund on October 29, 1997, and by the sole Shareholder of the Fund on
November 8, 1997. The Investment Advisory Agreement will continue in effect
until November 8,
<PAGE>
1999 and then will continue in effect from year to year if specifically approved
annually by (a) the Trustees of the Trust on behalf of the Fund, including a
majority of the Disinterested Trustees, or (b) a majority of the outstanding
voting securities of the Fund as defined in the 1940 Act.
The Fund's Investment Advisory Agreement may be terminated, without penalty
and at any time, by a similar vote upon not more than 60 days' nor less than 30
days' written notice by Northstar, the Trustees of the Trust, or a majority of
the outstanding voting securities of the Fund as defined in the 1940 Act. Such
agreement will automatically terminate in the event of its assignment, as
defined in Section 2(a)(4) of the 1940 Act.
Pursuant to a Subadvisory Agreement between Northstar and Brandes
Investment Partners, Inc. ("Brandes"), dated November 8, 1997, Brandes acts as
Subadviser to the Fund. In this capacity, Brandes, subject to the supervision
and control of Northstar and the Trustees of the Trust, will manage the Fund's
portfolio investments, consistently with the Fund's investment objective, and
will execute any of the Fund's investment policies that it deems appropriate to
utilize from time to time. Fees payable under the Subadvisory Agreement will
accrue daily and be paid monthly by Northstar. As compensation for its services,
Northstar will pay Brandes at the annual rate of 50% of the management fee that
the Fund pays Northstar. Brandes' address is 12750 High Bluff Drive, San Diego,
California 92130. Charles Brandes, who owns more than 25% of Brandes common
stock, serves as one of the managing directors of Brandes.
The Subadvisory Agreement for the Fund dated November 8, 1997 was approved
by the Trustees of the Trust on behalf of the Fund on October 29, 1997. The
Subadvisory Agreement will continue in effect until November 8, 1999 and then
will continue in effect from year to year if specifically approved annually by
(a) the Trustees of the Trust on behalf of the Fund, including a majority of
the Disinterested Trustees, or (b) a majority of the outstanding voting
securities of the Fund as defined in the 1940 Act.
The Subadvisory Agreement may be terminated without penalty and at any
time, by a similar vote upon 60 days' prior written notice by Northstar,
Brandes, the Trustees of the Trust on behalf of the Fund, or a majority of the
outstanding voting securities of the Fund as defined in the 1940 Act. Such
agreement will automatically terminate in the event of its assignment, as
defined in Section 2(a)(4) of the 1940 Act.
Northstar Administrators Corporation serves as administrator for the Fund,
pursuant to an Administrative Services Agreement with the Fund. Subject to the
supervision of the Trustees of the Trust, the Administrator provides the overall
business management and administrative services necessary to the proper conduct
of the Fund's business, except for those services performed by Northstar under
the Investment Advisory Agreement, the custodian for the Fund under the
Custodian Agreement, the transfer agent for the Fund under the Transfer Agency
Agreement, and such other service providers as may be retained by the Fund from
time to time. The Administrator acts as liaison among these service providers to
the Fund. The Administrator is also responsible for ensuring that the Fund
operates in compliance with applicable legal requirements and for monitoring
Northstar for compliance with requirements under applicable law and with the
<PAGE>
investment policies and restrictions of the Fund. The Administrator is an
affiliate of Northstar. The address of the Administrator is Two Pickwick Plaza,
Greenwich, Connecticut 06830.
The Administrative Services Agreement dated November 8, 1997 was approved
by the Trustees of the Trust on behalf of the Fund on October 29, 1997. The
Administrative Services Agreement will continue in effect until November 8, 1999
and then will continue in effect from year to year if specifically
approved annually by a majority of the Trustees of the Trust on behalf of the
Fund. The Administrator's fee is accrued daily against the value of the Fund's
net assets and is payable by the Fund monthly at an annual rate of 0.10% of the
Fund's average daily net assets. In addition, the Administrator charges an
annual account fee of $5.00 for each account of beneficial owners of shares in
the Fund for providing certain shareholder services and assisting broker-dealer
shareholder accounts.
NET ASSET VALUE
- --------------------------------------------------------------------------------
Equity securities are valued at the last sale price on the exchange or in
the principal OTC market in which such securities are being valued, or lacking
any sales, at the last available bid price. Prices of long-term debt securities
are valued on the basis of last reported sales price, or if no sales are
reported, the value is determined based upon the mean of representative quoted
bid or asked prices for such securities obtained from a quotation reporting
system or from established market makers, or at prices for securities of
comparable maturity, quality and type. Securities (including OTC options) for
which market quotations are not readily available and other assets are valued at
their fair value as determined by or under the direction of the Trustees. Such
fair value may be determined by various methods, including utilizing information
furnished by pricing services that determine calculations for such securities
using methods based, among other things, upon market transactions for comparable
securities and various relationships between securities that are generally
recognized as relevant.
Trading in securities in foreign securities markets is normally completed
well before the close of the New York Stock Exchange. In addition foreign
securities trading may not take place on all days on which the New York Stock
Exchange is open for trading, and may occur in certain foreign markets on days
on which the Fund's net asset value is not calculated. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and the close of the New York Stock Exchange will not be reflected in
the calculation of net asset value unless the Board of Trustees deems that the
particular event would materially affect net asset value, in which case an
adjustment will be made. Assets or liabilities expressed in foreign currencies
are translated, in determining net asset value, into U.S. dollars based on the
spot exchange rates at 1:00 p.m., EST, or at such other rates as Northstar may
determine to be appropriate.
The net asset value of the Fund's shares fluctuates and is determined
separately for each class as of the close of regular trading on the New York
Stock Exchange (currently 4:00 p.m. EST), on each business day that the Exchange
is open. Net asset value per share is computed by determining the value of the
Fund's assets (securities held plus cash and other assets, including dividend
and interest accrued but not received) less all liabilities of the Fund
(including accrued expenses other than class
<PAGE>
specific expenses), and dividing the result by the total number of shares
outstanding at such time. The specific expenses borne by each class of shares
will be deducted from that class and will result in different net asset values
and dividends. The net asset value per share of the Class B and Class C shares
of the Fund will generally be lower than that of the Class A shares because of
the higher class-specific expenses borne by each of the Class B and Class C
shares. Under normal market conditions, daily prices for securities are obtained
from independent pricing services, determined by them in accordance with the
registration statement for the Fund. Securities are valued at market value or,
if a market quotation is not readily available, at their fair value, determined
in good faith under procedures established by and implemented under the
supervision of the Trustees. Money market instruments maturing within 60 days
are valued using the amortized cost method of valuation. This involves valuing a
security at cost on the date of acquisition and thereafter assuming a constant
accretion of a discount or amortization of a premium to maturity, regardless of
the impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Fund would receive if it sold the instrument. See "BUYING, SELLING AND
EXCHANGING - HOW SHARES ARE PRICED " in the Prospectus.
PURCHASES AND REDEMPTIONS
- --------------------------------------------------------------------------------
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are not subject to a front-end or contingent
deferred sales load. There is no sales charge for qualified persons.
"Qualified Persons" are the following (a) active or retired Trustees,
Directors, Officers, Partners or Employees (including immediate family) of (i)
Northstar or any of its affiliated companies, (ii) the Fund or any Northstar
affiliated investment company or (iii) dealers having a sales agreement with the
Underwriter, (b) trustees or custodians of any qualified retirement plan or IRA
established for the benefit of a person in (a) above; (c) dealers, brokers or
registered investment advisers that have entered into an agreement with the
Underwriter providing for the use of shares of the Fund in particular investment
products such as "wrap accounts" or other similar managed accounts for the
benefit of the clients of such brokers, dealers and registered investment
advisers, and (d) pension, profit sharing or other benefit plans created
pursuant to a plan qualified under Section 401 of the Code or plans under
Section 457 of the Code, provided that such shares are purchased by an employer
sponsored plan with at least 50 eligible employees; (e) service providers of (i)
Northstar or any of its affiliated companies or (ii) the Fund or any Northstar
affiliated investment company and (f) Brandes employees, officers and partners.
Class A shares of the Fund may be purchased at net asset value, through a
dealer, where the amount invested represents redemption proceeds from another
open-end fund sold with a sales load and the same or similar investment
objective, and PROVIDED the following conditions are met: such redemption
occurred no more than 60 days prior to the purchase of shares of the Fund, the
redeemed shares were held for at least six months prior to redemption, and the
proceeds of the redemption are sent directly to Northstar or its agent, or
maintained in cash or a money market fund. No commissions will be paid to
dealers in connection with such purchases. There is also no initial sales charge
for "Purchasers" (defined below) if the initial amount invested in the Fund is
at least $1,000,000 or the Purchaser signs a $1,000,000 Letter of Intent, as
hereinafter defined.
<PAGE>
REDUCED SALES CHARGES ON CLASS A SHARES. Investors choosing the initial
sales alternative may under certain circumstances be entitled to pay reduced
sales charges. The sales charge varies with the size of the purchase and reduced
charges apply to the aggregate of purchases of the Fund made at one time by any
"Purchaser," which term includes (i) an individual and his/her spouse and their
children under the age of 21, (ii) a trustee or fiduciary purchasing for a
single trust, estate or single fiduciary account (including IRAs, pension,
profit-sharing or other employee benefit trusts created pursuant to a plan
qualified under Section 401 of the Code, a Simplified Employee Pension ("SEP"),
Salary Reduction and other Elective Simplified Employee Pension Accounts
("SARSEP")) and 403(b) and 457 plans, although more than one beneficiary or
participant is involved; and (iii) any other organized group of persons, whether
incorporated or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase at a discount of
redeemable securities of a registered investment company. The circumstances
under which "Purchasers" may pay reduced sales charges are described in the
Prospectus.
REDEMPTIONS. The right to redeem shares may be suspended and payment
therefor postponed during periods when the New York Stock Exchange is closed,
other than customary weekend and holiday closings, or, if permitted by rules of
the SEC, during periods when trading on the Exchange is restricted, or during
any emergency that makes it impracticable for the Fund to dispose of its
securities or to determine fairly the value of its net assets or during any
other period permitted by order of the SEC for the protection of investors.
Furthermore, the Transfer Agent will not mail redemption proceeds until checks
received for shares purchased have cleared, but payment will be forwarded
immediately upon the funds becoming available. Class B and Class C shareholders
will be subject to the applicable deferred sales charge, if any, for their
shares at the time of redemption.
EXCHANGES. The following conditions must be met for all exchanges among the
Northstar Funds and the Cash Management Fund of Salomon Brothers Investment
Series (a money-market fund that's available through Northstar, but isn't one
of the Northstar Funds) (the "Money Market Portfolio"): (i) the shares that will
be acquired in the exchange (the "Acquired Shares") are available for sale in
the shareholder's state of residence; (ii) the Acquired shares will be
registered to the same shareholder account as the shares to be surrendered (the
"Exchanged Shares"); (iii) the Exchanged Shares must have been held in the
shareholder's account for at least 30 days prior to the exchange; (iv) except
for exchanges into the Money Market Portfolios, the account value of the Fund
whose shares are to be acquired must equal or exceed the minimum initial
investment amount required by that Fund after the exchange is implemented; and
(v) a properly executed exchange request has been received by the Transfer
Agent.
The Fund reserves the right to delay the actual purchase of the Acquired
Shares for up to five business days if it determines that it would be
disadvantaged by an immediate transfer of proceeds from the redemption of
Exchanged Shares. Normally, however, the redemption of Exchanged Shares and the
purchase of Acquired Shares will take place on the day that the exchange request
is received in proper form. The Fund reserves the right to terminate or modify
its exchange privileges at any time upon notice to shareholders. Such notice
will be given at least 60 days in advance. It is the policy of Northstar to
discourage and prevent frequent trading by shareholders among the Northstar
Funds in response to market fluctuations. Accordingly, in order to maintain a
stable asset base in each Fund and to reduce administrative expenses borne by
each Fund, Northstar generally restricts shareholders to a maximum of six
exchanges out of a Fund each calendar year. If a shareholder exceeds this limit,
future exchange requests may be denied.
<PAGE>
CONVERSION FEATURE. Class B shares of the Fund will automatically convert
to Class A shares without a sales charge at the relative net asset values of
each of the classes after eight years from the acquisition of the Class B
shares, and as a result, will thereafter be subject to the lower distribution
fee (but same service fee) under the Class A Rule 12b-1 plan for the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to so qualify, the Fund must, among
other things, (i) derive each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to certain securities loans, gains
from the sale of securities or foreign currencies, or other income (including
but not limited to gains from options, futures or forward contracts) derived
with respect to its business of investing in stock, securities or currencies and
(ii) at the end of each quarter of the taxable year maintain at least 50% of the
value of its total assets in cash, government securities, securities of other
regulated investment companies, and other securities of issuers that represent,
with respect to each issuer, no more than 5% the value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer, and with no
more than 25% of its assets invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any one issuer or of
two or more issuers that the Fund controls and that are engaged in the same,
similar or related trades and businesses. As a regulated investment company, the
Fund generally will not be subject to federal income tax on its income and gains
that it distributes to shareholders, if at least 90% of its investment company
taxable income (which includes dividends, interest and the excess of any
short-term capital gains over long-term capital losses) for the taxable year is
distributed.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
the Fund's "required distribution" over actual distributions in any calendar
year. Generally, the "required distribution" is 98% of a Fund's ordinary income
for the calendar year plus 98% of its capital gain net income recognized during
the one-year period ending on October 31 plus undistributed amounts from prior
years. The Fund intends to make distributions sufficient to avoid imposition of
the excise tax. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by the Fund during October, November or
December of the year with a record date in such a month and paid by the Fund
during January of the following year. Such distributions will be taxable as if
received on December 31 in the year they are declared by the Fund, rather than
the year in which they are received.
The taxation of equity options and OTC options on debt securities is
governed by Code section 1234. Pursuant to Code section 1234, the premium
received by the Fund for selling a put or call option is not included in income
at the time of receipt. If the option expires, the premium is short-term capital
gain to the Fund. If the Fund enters into a closing transaction, the difference
between the amount paid to close out its position and the premium received is
short-term capital gain or loss. If a call option written by the Fund is
exercised, thereby requiring the Fund to sell the underlying security, the
premium will increase the amount realized upon the sale of such security and any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term
<PAGE>
depending upon the holding period of the security. With respect to a put or call
option that is purchased by the Fund, if the option is sold, any resulting gain
or loss will be a capital gain or loss, and will be long-term or short-term,
depending upon the holding period of the option. If the option expires, the
resulting loss is a capital loss and is long-term or short-term, depending upon
the holding period of the option. If the option is exercised, the cost of the
option, in the case of a call option, is added to the basis of the purchased
security and, in the case of a put option, reduces the amount realized on the
underlying security in determining gain or loss.
Certain options, futures contracts and forward contracts in which a Fund
may invest are "section 1256 contracts." Gains or losses on section 1256
contracts are generally considered 60% long-term and 40% short-term capital
gains or losses ("60/40 gains or losses"); however, foreign currency gains or
losses (as discussed below) arising from certain section 1256 contracts may be
treated as ordinary income or loss. Also, section 1256 contracts held by a Fund
at the end of each taxable year (and, generally, for purposes of the 4% excise
tax, on October 31 of each year) are treated as sold on such date at fair market
value, resulting in unrealized gains or losses being treated as though they were
realized.
Hedging transactions undertaken by the Fund may result in straddles for
U.S. federal income tax purposes. The straddle rules may accelerate income to
the Fund, defer losses to the Fund, and affect the character of gains (or
losses) realized by the Fund. Hedging transactions may increase the amount of
short-term capital gain realized by the Fund that is taxed as ordinary income
when distributed to shareholders. The Fund may make one or more of the various
elections available under the Code with respect to hedging transactions. If the
Fund makes any of the elections, the amount, character and timing of the
recognition of gains or losses from the affected positions will be determined
under rules that vary according to the elections made.
Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the Fund accrues interest or other
receivables, or accrues expenses or other liabilities, denominated in a foreign
currency and the time the Fund actually collects such receivables, or pays such
liabilities, generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and certain options, futures and forward contracts, gains or losses attributable
to fluctuations in the value of foreign currency between the date of acquisition
of the security or contract and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, may increase or decrease the amount of the Fund's
investment company taxable income to be distributed to its shareholders as
ordinary income.
The Fund will not realize gain or loss on a short sale of a security until
it closes the transaction by delivering the borrowed security to the lender. All
or a portion of any gain arising from a short sale may be treated as short-term
capital gain, regardless of the period for which the Fund held the security used
to close the short sale. In addition, the Fund's holding period for any security
that is substantially identical to that which is sold short may be reduced or
eliminated as a result of the short sale.
<PAGE>
Investments by the Fund in zero coupon securities will result in income to
the Fund equal to a portion of the excess of the face value of the securities
over their issue price (the "original issue discount") each year that the
securities are held, even though the Fund receives no cash interest payments.
This income is included in determining the amount of income that the Fund must
distribute to maintain its status as a regulated investment company and to avoid
the payment of federal income tax and the 4% excise tax. If the Fund invests in
certain high yield original issue discount obligations issued by corporations, a
portion of the original issue discount accruing on the obligations may be
eligible for the deduction for dividends received by corporations. In such
event, a portion of the dividends of investment company taxable income received
from the Fund by its corporate shareholders may be eligible for this deduction.
Gain derived by the Fund from the disposition of any market discount bonds
(i.e., bonds purchased other than at original issue, where the face value of the
bonds exceeds their purchase price) held by the Fund will be taxed as ordinary
income to the extent of the accrued market discount on the bonds, unless the
Fund elects to include the market discount in income as it accrues.
If the Fund invests in stock of certain foreign corporations that generate
largely passive investment-type income, or which hold a significant percentage
of assets that generate such income (referred to as "passive foreign investment
companies" or "PFICs"), these investments would be subject to special tax rules
designed to prevent deferral of U.S. taxation of the Fund's share of the PFIC's
earnings. In the absence of certain elections to report these earnings on a
current basis, regardless of whether the Fund actually receives any
distributions from the PFIC, investors in the Fund would be required to report
certain "excess distributions" from, and any gain from the disposition of stock
of, the PFIC as ordinary income. This ordinary income would be allocated ratably
to the Fund's holding period for the stock. Any amounts allocated to prior years
would be taxable at the highest rate of tax applicable in that year, increased
by an interest charge determined as though the amounts were underpayments of
tax.
Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. If more than
50% of the value of the Fund's total assets at the close of its taxable year
consists of securities of foreign corporations, the Fund will be eligible and
may elect to "pass through" to the Fund's shareholders the amount of foreign
taxes paid by the Fund. Pursuant to this election, a shareholder will be
required to include in gross income (in addition to dividends actually received)
its pro rata share of the foreign taxes paid by the Fund, and may be entitled
either to deduct its pro rata share of the foreign taxes in computing its
taxable income or to use the amount as a foreign tax credit against its U.S.
Federal income tax liability, subject to limitations. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year whether the
foreign taxes paid by the Fund will "pass through" for that year. If the Fund is
not eligible to make the election to "pass through" to its shareholders its
foreign taxes, the foreign taxes it pays will reduce its investment company
taxable income and distributions by the Fund will be treated as U.S. source
income.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to its foreign source
taxable income. For this purpose, if the
<PAGE>
pass-through election is made, the source of the Fund's income flows through to
its shareholders. With respect to the Funds, gains from the sale of securities
will be treated as derived from U.S. sources and certain currency fluctuation
gains, including fluctuation gains from foreign currency denominated debt
securities, receivables and payables, and options, futures and forward
transactions, will be treated as ordinary income derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign source
passive income (as defined for purposes of the foreign tax credit), including
the foreign source passive income passed through by the Fund.
The current position of the Internal Revenue Service (the "IRS") generally
is to treat a regulated investment company as owning its proportionate share of
the income and assets of any partnership in which it is a partner, in applying
the 90% qualifying income requirement and the asset diversification requirements
that, as described above, the Fund must satisfy to qualify as a regulated
investment company under the Code.
Dividends paid out of the Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. If a portion of the Fund's
income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Fund may be eligible for the corporate dividends-received
deduction. Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses), if any, designated as capital
gain dividends are taxable as long-term capital gains, regardless of how long
the shareholder has held the Fund's shares, and are not eligible for the
dividends-received deduction. Shareholders receiving distributions in the form
of additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net asset value of a share of the relevant Fund on the
reinvestment date. A distribution of an amount in excess of the Fund's current
and accumulated earnings and profits will be treated by a shareholder as a
return of capital that is applied against and reduces the shareholder's basis in
his or her shares. To the extent that the amount of any such distribution
exceeds the shareholder's basis in his or her shares, the excess will be treated
by the shareholder as gain from a sale or exchange of the shares. Shareholders
will be notified annually as to the U.S. federal tax status of distributions,
and shareholders receiving distributions in the form of additional shares will
receive a report as to the net asset value of those shares.
Upon the sale or other disposition of shares of the Fund, a shareholder may
realize a capital gain or loss that will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares. Any loss
realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30 days before and
ending 30 days after disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received by the
shareholder with respect to such shares.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of a Fund originally
acquired with a sales charge are disposed of within 90
<PAGE>
days after the date on which they were acquired and new shares of a regulated
investment company are acquired without a sales charge or at a reduced sales
charge. In that case, the gain or loss realized on the disposition will be
determined by excluding from the tax basis of the shares all or a portion of the
sales charge incurred in acquiring those shares. This exclusion applies to the
extent that the otherwise applicable sales charge with respect to the newly
acquired shares is reduced as a result of the shareholder having incurred a
sales charge paid for the new shares. This rule may be applied to successive
acquisitions of shares of stock.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by the Fund. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from the Fund ("backup withholding") at the
rate of 31%. Corporate shareholders and certain other shareholders specified in
the Code generally are exempt from such backup withholding. Generally,
shareholders subject to backup withholding will be (i) those for whom a
certified taxpayer identification number is not on file with the Fund, (ii)
those about whom notification has been received (either by the shareholder or by
the Fund) from the IRS that they are subject to backup withholding or (iii)
those who, to the Fund's knowledge, have furnished an incorrect taxpayer
identification number. Generally, to avoid backup withholding, an investor must,
at the time an account is opened, certify under penalties of perjury that the
taxpayer identification number furnished is correct and that he or she is not
subject to backup withholding.
The foregoing discussion relates solely to U.S. Federal income tax law.
Dividends and distributions also may be subject to state, local and foreign
taxes. Dividends paid by the Fund from income attributable to interest on
obligations of the U.S. Government and certain of its agencies and
instrumentalities may be exempt from state and local taxes in certain states.
Shareholders should consult their tax advisers regarding the possible exclusion
of this portion of their dividends for state and local tax purposes. Non-U.S.
investors also should consult their tax advisers concerning the tax consequences
of ownership of shares of the Fund, including the possibility that distributions
may be subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty).
Shareholders of Class A, Class B and Class C shares may direct that income
dividends and capital gain distributions be paid to them through various options
listed in the "Dividends and Distributions Reinvestment Options" section of the
Fund's current Prospectus. If a shareholder selects either of two such options
(that: (a) income dividends be paid in cash and capital gain distributions be
paid in additional shares of the same class of the Fund at net asset value; or
(b) income dividends and capital gain distributions both be paid in cash), and
the dividend/distribution checks cannot be delivered, or, if such checks remain
uncashed for six months, the Fund reserves
<PAGE>
the right to reinvest the dividend or distribution in the shareholder's account
at the then-current net asset value and to convert the shareholder's election to
automatic reinvestment in shares of the Fund from which the distributions were
made. The Fund has received from the IRS, rulings to the effect that (i) the
implementation of the multiple class purchase arrangement will not result in the
Fund's dividends or distributions constituting "preferential dividends" under
the Code, and (ii) that any conversion feature associated with a class of shares
does not constitute a taxable event under federal income tax law.
UNDERWRITER AND DISTRIBUTION SERVICES
- --------------------------------------------------------------------------------
Pursuant to Underwriting Agreements, Northstar Distributors, Inc. is the
Underwriter for the Fund and as such conducts a continuous offering pursuant to
a "best efforts" arrangement requiring it to take and pay for only such
securities as may be sold to the public. The Underwriter is an affiliate of the
Adviser and the Administrator.
The Underwriting Agreements may be terminated at any time on not more than
60 days' written notice, without payment of a penalty, by the Underwriter, by
vote of a majority of the outstanding class of voting securities of the Fund, or
by vote of a majority of the Trustees of the Fund, who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of the Plans, as defined below, or in any of the Underwriting
Agreements. The Underwriting Agreements will terminate automatically in the
event of their assignment.
In addition to the amount paid to dealers pursuant to the sales charge
table in the Prospectus, the Underwriter from time to time pays, from its own
resources or pursuant to the Plans, a bonus or other incentive to dealers (other
than the Underwriter) that employ a registered representative who sells a
minimum dollar amount of the shares of the Fund during a specific period of
time. Dealers may not use sales of any of the Fund's shares to qualify for or
participate in such programs to the extent such may be prohibited by a dealer's
internal procedures or by the laws of any state or any self-regulatory agency,
such as the National Association of Securities Dealers, Inc. Such bonuses or
other incentives take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives and members of their families to places within or without the
United States, or other bonuses such as certificates for airline tickets, dining
establishments or the cash equivalent of such bonuses. The Underwriter, from
time to time, reallows all or a portion of the sales charge on Class A shares,
which it normally reallows to individual selling dealers. However, such
additional reallowance generally will be made only when the selling dealer
commits to substantial marketing support such as internal wholesaling through
dedicated personnel, internal communications and mass mailings.
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (collectively the "Plans"). The
Plans permit the Fund to compensate the Underwriter in connection with
activities intended to promote the sale of shares of each class of shares of the
Fund as well as shareholder servicing.
<PAGE>
Pursuant to the Plan for Class A shares, the Fund may compensate the
Underwriter up to 0.30% of average daily net assets of the Fund's Class A
shares. Under the Plans for Class B and Class C shares, the Fund may compensate
the Underwriter up to 1.00% of the average daily net assets attributable to the
respective class of the Fund. Expenditures by the Underwriter under the Plans
shall consist of: (i) commissions to sales personnel for selling shares of the
Fund (including underwriting fees and financing expenses incurred in connection
with the sale of Class B and Class C shares); (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions that have entered
into agreements with the Underwriter in the form of a Dealer Agreement for
Northstar Funds for services rendered in connection with the sale and
distribution of shares of the Fund; (iv) payment of expenses incurred in sales
and promotional activities, including advertising expenditures related to the
Fund; (v) the costs of preparing and distributing promotional materials; (vi)
the cost of printing the Fund's Prospectus and SAI for distribution to potential
investors; and (vii) other activities that are reasonably calculated to result
in the sale of shares of the Fund.
A portion of the fees paid to the Underwriter pursuant to the 12b-1 plans
not exceeding 0.25% annually of the average daily net assets of the Fund's
shares may be paid as compensation for providing services to the Fund's
shareholders, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee"). In order to receive Service Fees under
the Plans, participants must meet such qualifications as are established in the
sole discretion of the Underwriter, such as services to the Fund's shareholders;
or services providing the Fund with more efficient methods of offering shares to
coherent groups of clients, members or prospects of a participant; or services
permitting purchases or sales of shares, or transmission of such purchases or
sales by computerized tape or other electronic equipment; or other processing.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and its shareholders and that the Plans should
result in greater sales and/or fewer redemptions of Fund shares. On a quarterly
basis, the Trustees will review a report on expenditures under the Plans and the
purposes for which expenditures were made. The Trustees will conduct an
additional, more extensive review annually in determining whether the Plans
shall be continued. By their terms, continuation of the Plans from year to year
is contingent on annual approval by a majority of the Trustees acting on behalf
of the Fund and by a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the
<PAGE>
operation of the Plans or any related agreements (the "Plan Trustees"). The
Plans provide that they may not be amended to increase materially the costs that
a class of the Fund may bear pursuant to the applicable Plan without approval of
the shareholders of that class, and that other material amendments to the Plans
must be approved by a majority of the Plan Trustees acting on behalf of the
Fund, by vote cast in person at a meeting called for the purpose of considering
such amendments. The Plans further provide that while each Plan is in effect,
the selection and nomination of Trustees who are not "interested persons" shall
be committed to the discretion of the Trustees who are not "interested persons."
A Plan may be terminated at any time by vote of a majority of the Plan Trustees
or a majority of the outstanding shares of the relevant class.
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The Trustees and principal Officers of the Trust and their business
affiliations for the past five years are set forth below. Unless otherwise
noted, the mailing address of the Trustees and Officers is Two Pickwick Plaza,
Greenwich, Connecticut 06830.
PAUL S. DOHERTY, Trustee. Age: 63.
President, Doherty, Wallace, Pillsbury and Murphy, P.C., Attorneys.
Director, Tambrands, Inc. Since October 1993, Trustee of the Northstar
affiliated investment companies.
ROBERT B. GOODE, JR., Trustee. Age: 67.
Currently retired. From 1990 to 1991, Chairman of The First Reinsurance
Company of Hartford. From 1987 to 1989, President and Director of American
Skandia Life Assurance Company. Since October 1993, Trustee of the
Northstar affiliated investment companies.
ALAN L. GOSULE, Trustee. Age: 56.
Partner, Rogers & Wells. Director, F.L. Putnam Investment Management
Co., Inc.
*MARK L. LIPSON, Trustee and President. Age: 48.
Director, Chairman and Chief Executive Officer of Northstar and
Northstar, Inc. Director and President of Northstar Administrators
Corporation and Director and Chairman of Northstar Distributors, Inc.,
President and Trustee of the Northstar affiliated investment companies
since October 1993. Prior to August, 1993, Director, President and Chief
Executive Officer of National Securities & Research Corporation and
President and Director/Trustee of the National Affiliated Investment
Companies and certain of National's subsidiaries.
WALTER H. MAY, Trustee. Age: 61.
Retired. Former Senior Executive for Piper Jaffrey, Inc.
DAVID W.C. PUTNAM, Trustee. Age: 58.
President, Clerk and Director of F.L. Putnam Securities Company, Inc.,
F.L. Putnam Investment Management Company, Inc., Interstate Power Company,
Inc., Trust Realty Corp. and Bow Ridge Mining Co.; Director of Anchor
Investment Management Corporation; President and Trustee of Anchor Capital
Accumulation Trust, Anchor International Bond Trust, Anchor Gold and
Currency Trust, Anchor Resources and Commodities Trust and Anchor Strategic
Assets Trust.
JOHN R. SMITH, Trustee. Age: 74.
From 1970-1991, Financial Vice President of Boston College; President
of New England Fiduciary Company (financial planning) since 1991; Chairman
of Massachusetts Educational Financing Authority since 1987; Vice Chairman
of Massachusetts Health and Education Authority.
*JOHN G. TURNER, Trustee. Age: 58.
Since May 1993, Chairman and CEO of ReliaStar Financial Corporation and
ReliaStar Life Insurance Co. and Chairman of other ReliaStar
<PAGE>
Affiliated Insurance Companies since 1995. Since October 1993, Director of
Northstar and affiliates. Prior to May 1993, President and CEO of ReliaStar
and Northwestern National.
DAVID W. WALLACE, Trustee. Age: 73.
Chairman of Putnam Trust Company, Lone Star Industries and FECO
Engineered Systems, Inc. He is also President and Trustee of Robert R.
Young Foundation and Governor of the New York Hospital. Director of UMC
Electronics and Zurn Industries, Inc. Former Chairman and Chief Executive
Officer, Todd Shipyards and Bangor Punta Corporation, and former Chairman
and Chief Executive Officer of National Securities & Research Corporation.
Since October 1993, Trustee of the Northstar affiliated investment
companies.
THOMAS OLE DIAL, Vice President. Age: 41.
Executive Vice President and Chief Investment Officer - Fixed Income of
Northstar and Principal, T.D. & Associates, Inc. From 1989 to August 1993,
Executive Vice President and Chief Investment Officer - Fixed Income of
National Securities and Research Corporation, Vice President of National
Affiliated Investment Companies, and Vice President of NSR Asset Management
Corporation. From 1988 to 1989, President of Dial Capital Management.
AGNES MULLADY, Vice President and Treasurer. Age: 39.
Senior Vice President and Chief Financial Officer of Northstar, Senior
Vice President and Treasurer of Northstar Administrators corporation, and
Vice President and Treasurer of Northstar Distributors, Inc. From 1987 to
1993, Vice President and Treasurer of National Securities & Research
Corporation.
GEOFFREY WADSWORTH, Vice President. Age: 54.
Vice President of Northstar. Former Vice President and Portfolio
Manager with National Securities & Research Corporation.
- --------------------
*Deemed to be an "interested person" of the Trust, as defined by the 1940 Act.
Northstar and Northstar Administrators Corporation make their personnel
available to serve as Officers and "Interested Trustees" of the Northstar Funds
(the "Funds"). All Officers and Interested Trustees of the Funds are compensated
by Northstar or Northstar Administrators Corporation. Trustees who are not
<PAGE>
"interested persons" of the Adviser are paid an annual retainer fee of $7,500
for their combined services as Trustees to the Funds and to retail funds
sponsored or advised by the Adviser, and a per meeting fee of $1,750 for
attendance at each joint meeting of the Funds and the other Northstar retail
funds. The Funds also reimburse Trustees for expenses incurred by them in
connection with such meetings.
COMPENSATION TABLE
PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Pension Benefits Total Compensation
Accrued as Part of Estimated Annual from All Funds in
Fund Expenses Benefits upon Northstar Complex(b)
Compensation from Retirement
Fund
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Paul S. Doherty (a) 0 0 14,500
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Robert B. Goode, Jr. (a) 0 0 13,500
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Alan L. Gosule (a) 0 0 14,500
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Mark L. Lipson (a) 0 0 0
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Walter H. May (a) 0 0 13,500
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
David W.C. Putnam (a) 0 0 10,000
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
John R. Smith (a) 0 0 14,500
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
John G. Turner (a) 0 0 0
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
David W. Wallace (a) 0 0 14,500
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>
- --------------------
(a) See table below for Fund specific compensation. The Fund had not
commenced operations as of December 31, 1997.
(b) Compensation paid by the Northstar Trust funds, the Northstar
Variable Trust funds and the remaining six funds, Northstar Special, Growth,
Balance Sheet Opportunities, Government Securities, Strategic Income and High
Yield Funds, formerly advised by BSC.
<TABLE>
<CAPTION>
INDIVIDUAL FUND
FISCAL YEAR COMPENSATION TABLES
- -------------------------------- ----------------- ------------------- ---------------- --------------------
Income and Growth High Total Return Growth + Value High Total Return II
- -------------------------------- ----------------- ------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Paul S. Doherty 1,401.19 2,395.23 915.15 500
- -------------------------------- --------------- -------------------- ------------------ ---------------------
Robert B. Goode, Jr. 1,501.08 2,377.06 1,072.77 659.08
- -------------------------------- --------------- -------------------- ------------------ ---------------------
Alan L. Gosule 1,560.28 2,554.32 1,074.23 659.08
- -------------------------------- --------------- -------------------- ------------------ ---------------------
Mark L. Lipson 0 0 0 0
- -------------------------------- --------------- -------------------- ------------------ ---------------------
Walter H. May 1,560.28 2,554.32 1,074.23 659.08
- -------------------------------- --------------- -------------------- ------------------ ---------------------
David W.C. Putnam 1,501.08 2,377.06 1,072.77 659.08
- -------------------------------- --------------- -------------------- ------------------ ---------------------
John R. Smith 1,560.28 2,554.32 1,074.23 659.08
- -------------------------------- --------------- -------------------- ------------------ ---------------------
John G. Turner 0 0 0 0
- -------------------------------- --------------- -------------------- ------------------ ---------------------
David W. Wallace 1,401.17 2,395.21 915.14 499.99
- -------------------------------- --------------- -------------------- ------------------ ---------------------
</TABLE>
<PAGE>
INDIVIDUAL FUND
FISCAL YEAR COMPENSATION TABLES
<TABLE>
<CAPTION>
- -------------------------------- ---------------------- ----------------------- ----------------------
International Special(c) Growth(c)
Value
- -------------------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Paul S. Doherty 500 1,646 1,646
- -------------------------------- ---------------------- ----------------------- ----------------------
Robert B. Goode, Jr. 659.08 1,563 1,563
- -------------------------------- ---------------------- ----------------------- ----------------------
Alan L. Gosule 659.08 1,646 1,646
- -------------------------------- ---------------------- ----------------------- ----------------------
Mark L. Lipson 0 0 0
- -------------------------------- ---------------------- ----------------------- ----------------------
Walter H. May 659.08 1,583 1,583
- -------------------------------- ---------------------- ----------------------- ----------------------
David W.C. Putnam 659.08 1,188 1,188
- -------------------------------- ---------------------- ----------------------- ----------------------
John R. Smith 659.08 1,646 1,646
- -------------------------------- ---------------------- ----------------------- ----------------------
John G. Turner 0 0 0
- -------------------------------- ---------------------- ----------------------- ----------------------
David W. Wallace 500 1.65 1,646
- -------------------------------- ---------------------- ----------------------- ----------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
Balance Sheet Government Strategic Income(c) High Yield(c)
Opportunities(c) Securities(c)
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Paul S. Doherty 1,646 1,646 1,646 1,646
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
Robert B. Goode, Jr. 1,563 1,563 1,563 1,563
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
Alan L. Gosule 1,646 1,646 1,646 1,646
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
Mark L. Lipson 0 0 0 0
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
Walter H. May 1,583 1,583 1,583 1,583
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
David W.C. Putnam 1,188 1,188 1,188 1,188
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
John R. Smith 1,646 1,646 1,646 1,646
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
John G. Turner 0 0 0 0
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
David W. Wallace 1,646 1,646 1,646 1,646
- -------------------------------- ---------------------- ---------------------- --------------------- ----------------------
</TABLE>
- --------------------
(c) Prior to June 2, 1995 the Trustees who were not interested persons,
other than David Putnam, were paid a per fund fee of $500 for each full calendar
year during which services were rendered to the Funds. In addition, they were
paid a per fund fee of $250 for attending each of the Trustees' meetings, $100
per fund for attending each audit committee meeting, $100 audit committee
retainer per fund and were reimbursed for out-of-pocket expenses. Mr.
Putnam, former Chairman of these Funds, received a fee of $30,000 per annum.
OTHER INFORMATION
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P. has been selected as the
independent accountants of the Fund. Coopers & Lybrand L.L.P. audits the Fund's
annual financial statements and expresses an opinion thereon.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian, and fund accounting agent for
the Fund.
TRANSFER AGENT. First Data Investor Services Group, Inc., 4400 Computer
Drive, Westborough, Massachusetts 01581-5120, acts as the transfer agent for the
Fund.
<PAGE>
REPORTS TO SHAREHOLDERS. The fiscal year of the Fund ends on October 31.
The Fund will send financial statements to its shareholders at least
semi-annually. An annual report containing financial statements audited by the
independent accountants will be sent to shareholders each year.
ORGANIZATIONAL AND RELATED INFORMATION. The Fund is a series of the
Northstar Trust (formerly "Northstar Advantage Trust"). Two of the Trust's other
series, Northstar Income and Growth Fund (formerly "Northstar Advantage Income
and Growth Fund") and Northstar High Total Return Fund (formerly "Northstar
Advantage High Total Return Fund"), were organized in 1993. Northstar Growth +
Value Fund and Northstar High Total Return Fund II were organized in 1996. The
International Value Fund commenced operations on March 6, 1995 as the Brandes
International Fund, a series of the Brandes Investment Trust. It was reorganized
on April 21, 1997 as the Northstar International Value Fund, a series of the
Northstar Trust.
The shares of the Fund, when issued, will be fully paid and non-assessable,
have no preference, preemptive, or similar rights, and will be freely
transferable. There will normally be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Shareholders may, in accordance with the Declaration of Trust, cause a
meeting of shareholders to be held for the purpose of voting on the removal of
Trustees. Meetings of the shareholders will be called upon written request of
shareholders holding in the aggregate not less than 10% of the outstanding
shares of the Fund or class having voting rights. Except as set forth above and
subject to the 1940 Act, the Trustees will continue to hold office and appoint
successor Trustees.
Under Massachusetts law, there is a remote possibility that shareholders of
a business trust could, under certain circumstances, be held personally liable
as partners for the obligations of such trust. The Amended and Restated
Declaration of Trust for the Trust contains provisions intended to limit such
liability and to provide indemnification out of Fund property of any shareholder
charged or held personally liable for obligations or liabilities of the Fund
solely by reason of being or having been a shareholder of the Fund and not
because of such shareholder's acts or omissions or for some other reason. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would be unable
to meet its obligations.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
Performance information for the Fund may be compared in reports and
promotional literature to (i) the S&P 500, Dow Jones Industrial Average
("DJIA"), or other unmanaged indices, so that investors may compare the Fund's
results to those of a group of unmanaged securities that are widely regarded by
investors as representative of the securities markets in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, Inc., a widely
used independent research firm that ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications or persons who rank mutual funds on overall performance or other
criteria; (iii) the Consumer Price Index (measure for inflation) to assess the
real rate of return from an investment in the Fund; and (iv) well known
monitoring
<PAGE>
sources of CD performance rates, such as Solomon Brothers, Federal Reserve
Bulletin, American Bankers and Tower Data/The Wall Street Journal. Unmanaged
indices may assume the reinvestment of dividends, but generally do not reflect
deductions for administrative and management costs and expenses. Performance
rankings are based on historical information and are not intended to indicate
future performance.
In addition, the Fund may, from time to time, include various measures of
the Fund's performance, including the current yield, the tax-equivalent yield
and the average annual total return of shares of the Fund in advertisements,
promotional literature or reports to shareholders or prospective investors. Such
materials may occasionally cite statistics to reflect the Fund's volatility
risk.
AVERAGE ANNUAL TOTAL RETURN. Standardized quotations of average annual
total return ("Standardized Return") for each class of shares will be expressed
in terms of the average annual compounded rate of return for a hypothetical
investment in such class of shares over periods of 1, 5 and 10 years or up to
the life of the class of shares, calculated for each class separately pursuant
to the following formula:
Average Annual Total Return = P(1+T) to the power of n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = the average annual total return
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the period).
All total return figures reflect the deduction of a proportional share of
each Class's expenses (on an annual basis), the deduction of the maximum initial
sales load (in the case of Class A shares) and the maximum contingent deferred
sales charge applicable to a complete redemption of the investment (in the case
of Class B and Class C shares), and assume that all dividends and distributions
are reinvested when paid.
YIELD. Quotations of yield for a specific class of shares of the Fund will
be based on all investment income attributable to that class earned during a
particular 30-day (or one month) period (including dividends and interest), less
expenses accrued during the period ("net investment income"), and will be
computed by dividing the net investment income per share of that class earned
during the period by the maximum offering price per share on the last day of the
month, according to the following formula:
<PAGE>
Yield = 2[(a-b + 1) to the power of 6 -1]
---------------------------------
cd
Where:
a = dividends and interest earned during the period attributable
to a specific class of shares
b = expenses accrued for the period attributable to that class
(net of reimbursements)
c = the average daily number of shares of that class outstanding
during the period that were entitled to receive dividends,
and
d = the maximum offering price per share on the last day of the
period
The maximum offering price includes a maximum contingent deferred sales
load of 5% for Class B shares and 1% for Class C shares.
All accrued expenses are taken into account as follows. Accrued expenses
include all recurring expenses that are charged to all shareholder accounts in
proportion to the length of the base period, including but not limited to
expenses under the Fund's distribution plans. Except as noted, the performance
results take the contingent deferred sales load into account.
NON-STANDARDIZED RETURN. In addition to the performance information
described above, the Fund may provide total return information that is not
calculated according to the formula set forth above ("Non-Standardized Return").
Neither initial nor contingent deferred sales charges are taken into account in
calculating Non-Standardized Return. Excluding sales charges from a total return
calculation produces a higher total return figure.
The Fund may quote its performance in various ways, using various types of
comparisons to market indices, other funds or investment alternatives, or to
general increases in the cost of living. All performance information supplied by
the Fund in advertising is historical and is not intended to indicate future
returns. The Fund's share prices and total returns fluctuate in response to
market conditions and other factors, and the value of the Fund's shares when
redeemed may be more or less than their original cost.
Evaluations of Fund performance made by independent sources may also be
used in advertisements concerning the Fund, including reprints of, or selections
from, editorials or articles about the Fund. These editorials or articles may
include quotations of performance from other sources, such as Lipper or
Morningstar. Sources for Fund performance information and articles about the
Fund may include the following: BANXQUOTE, BARRON'S, BUSINESS WEEK, CDA
INVESTMENT TECHNOLOGIES, INC., CHANGING TIMES, CONSUMER DIGEST, FINANCIAL WORLD,
FORBES, FORTUNE, IBC/DONOGHUES'S MONEY FUND REPORT, IBBOTSON ASSOCIATES, INC.,
INVESTMENT COMPANY DATA, INC., INVESTOR'S DAILY, LIPPER ANALYTICAL SERVICES,
INC.'S MUTUAL FUND PERFORMANCE
<PAGE>
ANALYSIS, MONEY, MUTUAL FUND VALUES, THE NEW YORK TIMES, PERSONAL INVESTING
NEWS, PERSONAL INVESTOR, SUCCESS, USA TODAY, U.S. NEWS AND WORLD REPORT, WALL
STREET JOURNAL, WIESENBERGER INVESTMENT COMPANIES SERVICES, and WORKING WOMAN.
When comparing total return, yield and investment risk of shares of the
Fund with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in shares of
the Fund. For example, certificates of deposit may have fixed rates of return
and may be insured as to principal and interest by the FDIC, while the Fund's
returns will fluctuate and its share values and returns are not guaranteed.
Money market accounts offered by banks also may be insured by the FDIC and may
offer stability of principal. U.S. Treasury securities are guaranteed as to
principal and interest by the full faith and credit of the U.S. Government.
Money market mutual funds may seek to offer a fixed price per share.
The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of the
Fund for any period in the future. The performance of the Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest, and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: Not Applicable
(b) Exhibits:
(1) Declaration of Trust*
(2) By-Laws*
(3) N/A
(4) N/A
(5) Form of Investment Advisory Agreement
(a) Form of Subadvisory Agreement for the
Northstar Emerging Markets Fund
(6) Forms of Underwriting Agreements
(7) N/A
(8) Custody Agreement**
(9) Administrative Services Agreement
(10) Opinion of Counsel
(11) N/A
(12) N/A
(13) N/A
(14 N/A
(15) Form of Distribution and Service Plan
(16) Performance Information***
(17) N/A
(18) Multiple Class Plan Pursuant to Rule 18f-3
* Filed as part of PEA No. 8 and incorporated herein by reference.
** Filed as part of PEA No. 7 and incorporated herein by reference.
*** To be filed by amendment.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
There are no persons controlled by or under common control with Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of October 31, 1997, the Registrant had the following security holders:
TOTAL
FUND ACCTS
- ---- -----
Income & Growth A 1416
Income & Growth B 3534
Income & Growth C 1600
Total Return A 7970
Total Return B 24209
Total Return C 4363
Growth + Value A 2235
Growth + Value B 5411
Growth + Value C 1829
Int'l Value A 3763
Int'l Value B 4833
Int'l Value C 3999
Total Return IIA 396
Total Return IIB 1745
Total Return IIC 498
ITEM 27. INDEMNIFICATION
Section 4.3 of Registrant's Declaration of Trust provides the following:
<PAGE>
(a) Subject to the exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a
party or otherwise by virtue of his being or having been a
Trustee or officer and against amounts paid or incurred by him
in the settlement thereof;
(ii) the word "claim", "action", "suit" or "proceeding" shall apply
to all claims, actions or suits or proceedings (civil, criminal,
administrative or other including appeals), actual or
threatened; and the words "liability" and "expenses" shall
include without limitation, attorneys fees, costs, judgments,
amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a series thereof, or the
Shareholders by reason of a final adjudication by a court or
other body before which a proceeding was brought or that he
engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in
reasonable belief that his action was in the best interest of
the Trust; and
(iii) in the event of a settlement or other disposition not involving
a final adjudication as provided in paragraph (b) (i) or (b)
(ii) resulting in a payment by a Trustee or officer, unless
there has been a determination that such Trustee or officer did
not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of
his office:
(A) by the court or other body approving the settlement or
other disposition; or
(B) based upon the review of readily available facts (as
opposed to full trial-type inquiry) by (x) vote of a
majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees
then in office act on the matter) or (y) written opinion of
independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee
or officer and shall inure to the benefit of the heirs, executors,
administrators and assigns of such a person. Nothing contained herein shall
affect any
<PAGE>
rights to indemnification to which personnel of the Trust other than
Trustees and officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled to
indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other appropriate
security provided by the recipient or the Trust shall be insured
against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the
matter) or an independent legal counsel in a written opinion shall
determine, based upon a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that
the recipient ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is not (i) an
Interested Person of the Trust (including anyone who has been exempted from
being an Interested Person by any rule, regulation or order of the Commission),
or (ii) involved in the claim, action, suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in
connection with the successful defense of any action suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy, as expressed in the Act and be governed by final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Fund" in the Prospectus and "Services of Northstar, the
Subadviser and the Administrator" and "Trustees and Officers" in the Statement
of Additional Information, each of which is included in the Registration
Statement.
Set forth below is a list of each officer and director of the Adviser indicating
each business, profession, vocation or employment of a substantial nature in
which each such person has been engaged since July 31, 1994.
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL
INVESTMENT BUSINESS, PROFESSION
NAME ADVISER VOCATION OR EMPLOYMENT
<S> <C> <C>
John Turner Director Chairman and CEO, ReliaStar Financial
Corp.; Director of Northstar Affiliates;
Trustee and Chairman, Northstar
Affiliated Investment Companies.
John Flittie Director President, ReliaStar Financial Corp.
Director, Northstar Affiliates.
Mark L. Lipson Chairman/CEO Director and Officer of Northstar
Director Distributors, Inc., Northstar Administrators
Corp. and Northstar, Inc. Trustee
and President, Northstar Affiliated
Investment Companies.
Robert J. Adler Executive Vice President, Northstar Distributors, Inc.
President, Sales &
Marketing
Thomas Ole Dial Executive Vice Vice President, Northstar Affiliated
President - Chief Investment Companies, and Principal, Td
Investment Officer, Associates Inc.
Fixed Income
Geoffrey Wadsworth Vice President/ Vice President - Northstar Affiliated
Investments and Investment Companies.
Portfolio Manager
Ryan Johanson Vice President/ Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio Manager,
Director of Global Market Risk Management,
Manager of Banque Indosuez.
Jeffrey Aurigemma Vice President - Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio Manager.
Michael Graves Vice President Vice President - Northstar Affiliated
Investments Investment Companies.
Agnes Mullady Sr. Vice President Vice President & Treasurer of Northstar
and CFO Affiliates and the Northstar Affiliated
Investment Companies.
<PAGE>
Gertrude Purus Vice President Vice President Northstar Distributors, Inc. and
Operations Northstar Administrators Corp.
Stephen Vondrak Vice President Vice President - Northstar Distributors, Inc.
Sales/Marketing Former Regional Marketing
Manager with Roger Engemann and
Associates.
Mark Sfarra Vice President - Vice President - Northstar Distributors, Inc.
Marketing
</TABLE>
Set forth below is a list of senior members of the investment committee of
Brandes Investment Partners, L.P. indicating each business, profession, vocation
or employment of a substantial nature in which each such person has been engaged
since July 31, 1994.
<TABLE>
<CAPTION>
Name and
Principal
Business Address Principal Occupations During Past Two Years
- ---------------- --------------------------------------------
<S> <C>
Charles Howard Business: Managing Partner, Brandes Investment
Brandes, CFA Partners, L.P., 5/96 to present; Managing Director,
12750 High Bluff Dr. Brandes Investment Partners, Inc., 4/93 to 4/96.
San Diego, CA 92130
Jeffrey Atwood Busby, Business: Managing Partner, Brandes Investment
CFA Partners, L.P., 5/96-present; Managing Director,
12750 High Bluff Dr. Brandes Investment Partners, Inc., 4/93- 4-96.
San Diego, CA 92130
Glenn Richard Carlson, Business: Managing Partner, Brandes
CFA Investment Partners, L.P., 5/96-present; Managing
12750 High Bluff Dr. Director, Brandes Investment Partners, Inc., 4/93-4/96.
San Diego, CA 92130
William Andrew Business: Principal, Brandes Investment Partners, L.P.,
Pickering, CFA 5/1/96-present; Vice President, Brandes Investment
12750 High Bluff Dr. Partners, Inc. 4/1/93-4/30/96.
San Diego, CA 92130
The following is a Managing Partner:
Barry Paul O'Neil Business: Managing Partner, Brandes Investment
12750 High Bluff Dr. Partners, L.P., 5/1/96-present; Managing Director,
San Diego, CA 92130 Brandes Investment Partners, Inc., 4/1/93-4/30/96.
</TABLE>
ITEM 29 . PRINCIPAL UNDERWRITER
(a) See "HOW THE FUNDS ARE ORGANIZED AND MANAGED", "MEET THE PORTFOLIO MANAGERS"
and "YOUR GUIDE TO BUYING, SELLING AND EXCHANGING SHARES OF NORTHSTAR FUNDS" in
the Prospectus and "Underwriter and Distribution Services" in the Statement of
Additional Information, both of which are included in this Post-Effective
Amendment to the Registration Statement. Unless otherwise indicated, the
principal business address for each person is c/o Northstar, Two Pickwick Plaza,
Greenwich, CT 06830.
<TABLE>
<CAPTION>
(b) (1) (2) (3)
NAME AND PRINCIPAL POSITION AND OFFICES POSITION AND OFFICES
ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
John Turner Director Trustee, Chairman
20 Washington Ave. South
Minneapolis, MN
John Flittie Director None
20 Washington Ave. South
Minneapolis, MN
Mark L. Lipson Chairman & Director Trustee and President
Rober J. Adler President None
Mark Blinder Reg. Vice President None
Mike Brescia Reg. Vice President None
Jennifer Byrne Reg. Vice President None
Eugene Carlin Reg. Vice President None
<PAGE>
Charles Dolce Reg. Vice President None
Chris Erbeck Reg. Vice President None
Rick Galloway Reg. Vice President None
Neil Gargiulo Reg. Vice President None
Jim Gordon Reg. Vice President None
Justin Gross Reg. Vice President None
Edward Ittner Reg. Vice President None
Nancy Lavin Reg. Vice President None
Daniel Leonard Reg. Vice President None
David Linton Reg. Vice President None
Stephen O'Brien Reg. Vice President None
Don Rhodes Reg. Vice President None
Lauren Schiano Reg. Vice President None
Gregg Smyth Reg. Vice President None
Rich Westlund Reg. Vice President None
Stephen Vondrak Vice President None
Mark Sfarra Vice President None
Gertrude Purus Vice President None
Agnes Mullady Vice President & Vice President & Treasurer
Treasurer
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
State Street Bank and Trust Company maintains the following records at 225
Franklin Street, Boston, Massachusetts 02110, as Custodian and Fund Accounting
Agent for the Fund:
(1) Receipts and delivery of securities including certificate numbers;
(2) Receipts and disbursement of cash;
(3) Records of securities in transfer, securities in physical
possession, securities owned and securities loaned; and
(4) Fund Accounting Records.
First Data Investor Services Group ("First Data") maintains the following
records at One Exchange Place, 11 Floor, Boston, Massachusetts 02109, as
Transfer Agent and Blue Sky Administrator for the Fund:
(1) Shareholder Records;
(2) Share accumulation accounts: Details as to dates, number of
shares and share prices of each account;
(3) Fund Accounting Records; and
(4) State Securities Registration Records.
All other records required by item 30(a) are maintained at the office of the
Administrator, Two Pickwick Plaza, Greenwich, CT 06830 and the office of the
Subadviser, 12750 High Bluff Drive, San Diego, CA 92130.
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
(a) Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee or Trustees when
requested in writing to do so by the holders of at least 10% of the Trusts'
outstanding shares of beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
(b) Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders upon
request and without charge.
(c) Registrant undertakes to file a post-effective amendment, using financial
statements which need not be certified, within four to six months from the
effective date of the registration statement with respect to the Northstar
Emerging Markets Value Fund.
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certified that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933, and the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of Greenwich
and State of Connecticut on the 26th day of December, 1997.
NORTHSTAR TRUST
/s/Mark L. Lipson
Mark L. Lipson, President*
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/John G. Turner Chairman/Trustee December 26, 1997
John G. Turner*
/s/Mark L. Lipson President/Trustee December 26, 1997
-----------------------------------
Mark L. Lipson*
/s/Paul S. Doherty Trustee December 26, 1997
-----------------------------------
Paul S. Doherty*
/s/David W. Wallace Trustee December 26, 1997
-----------------------------------
David W. Wallace*
/s/Robert B. Goode, Jr. Trustee December 26, 1997
-----------------------------------
Robert B. Goode, Jr.*
/s/Walter H. May Trustee December 26, 1997
-----------------------------------
Walter H. May*
/s/Alan L. Gosule Trustee December 26, 1997
-----------------------------------
Alan L. Gosule*
/s/David W.C. Putnam Trustee December 26, 1997
-----------------------------------
David W. C. Putnam*
/s/John R. Smith Trustee December 26, 1997
-----------------------------------
John R. Smith*
/s/Agnes Mullady Principal Financial December 26, 1997
Agnes Mullady and Accounting Officer
</TABLE>
By:/s/Agnes Mullady
*Agnes Mullady - Attorney-in-Fact. Executed pursuant to powers of
attorney filed with PEA Nos. 6 and 7.
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER UNDER
PART C OF FORM N-1A NAME OF EXHIBIT
5 Form of Investment Advisory Agreement
5(a) Form of Subadvisory Agreement
6 Forms of Underwriting Agreements
9 Administrative Services Agreement
10 Opinion of Counsel
15 Form of Distribution and Service Plan
18 Multiple Class Plan Pursuant to Rule 18f-3
EXHIBIT 5
NORTHSTAR TRUST
INVESTMENT ADVISORY AGREEMENT
AS AMENDED NOVEMBER 8, 1997
AGREEMENT made this 8th day of November, 1993, and amended and restated
on this 8th day of November, 1997, by and between NORTHSTAR TRUST, a
Massachusetts business trust, (the "Trust") and NORTHSTAR INVESTMENT MANAGEMENT
CORPORATION., a Delaware business corporation (the "Adviser").
The Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
consisting of the series named on schedule 1 hereto (each "Fund" and
collectively the "Funds"), as such schedule may be revised from time to time.
The Trust desires to retain the Adviser to render investment advisory
services to the Funds, and the Adviser is willing to render such investment
advisory on the terms set forth below.
The parties agree as follows:
1. The Trust hereby appoints the Adviser to act as investment adviser
to the Trust and the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services described, for the compensation provided, in this Agreement.
2. Subject to the supervision of the Trustees, the Adviser shall manage
the investment operations of the Funds and the composition of each Fund's
portfolio, including the purchase and retention and disposition of portfolio
securities, in accordance with each Fund's investment objectives, policies and
restrictions as stated in the Trust's Prospectus and Statement of Additional
Information (as defined below) subject to the following understandings:
(a) The Adviser shall provide supervision of each Fund's investments
and determine from time to time what investments will be made, held or disposed
of or what securities will be purchased and retained, sold or loaned by each
Fund, and what portion of the assets will be invested or held uninvested as
cash.
(b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement.
(c) The Adviser, in the performance of its duties and obligations under
this Agreement, shall (i) act in conformity with the Declaration of Trust, By-
Laws, Prospectus and Statement of Additional Information of the Trust, with the
instructions and directions of the Trustees and (ii) conform to and comply with
the requirements of the Investment Company Act and all other applicable federal
and state laws and regulations.
<PAGE>
(d) (i) The Adviser shall determine the securities to be purchased or
sold by each Fund and will place orders pursuant to its determinations with or
through such persons, brokers or dealers to carry out the policy with respect to
brokerage as set forth in the Trust's Prospectus and Statement of Additional
Information or as the Trustees may direct from time to time. In providing each
Fund with investment supervision, the Adviser will give primary consideration to
securing the most favorable price and efficient execution. The Adviser may also
consider the financial responsibility, research and investment information and
other services and research related products provided by brokers or dealers who
may effect or be a party to any such transactions or other transactions to which
other clients of the Adviser may be a party. The Funds recognize that the
services and research related products provided by such brokers may be useful to
the Adviser in connection with its services to other clients.
(ii) When the Adviser deems the purchase or sale of a security to be in
the best interest of a Fund as well as other clients, the Adviser, to the extent
permitted by applicable laws and regulations, may aggregate the securities to be
sold or purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transactions, will
be made by the Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to each Fund and to such other
clients.
(e) The Adviser shall maintain, or cause to be maintained, all books
and records required under the Investment Company Act to the extent not
maintained by the custodian of the Trust. The Adviser shall render to the
Trustees such periodic and special reports as the Trustees may reasonably
request.
(f) The Adviser shall provide the Trust's custodian on each business
day information relating to all transactions concerning each Fund's assets.
(g) The investment management services of the Adviser to the Trust and
to each Fund under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services to others.
3. The Trust has delivered to the Adviser copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Declaration of Trust, as amended, as filed with the Secretary of
the Commonwealth of Massachusetts (such Declaration of Trust, as in effect on
the date hereof and as further amended from time to time, are herein called the
"Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Trustees authorizing the appointment
of the Adviser and approving this Agreement on behalf of the Trust and each
Fund;
<PAGE>
(d) Registration Statement on Form N-lA under the Investment Company
Act and the Securities Act of 1933, as amended from time to time (the
"Registration Statement"), as filed with the Securities and Exchange Commission
(the "Commission"), relating to the Trust and shares of beneficial interest of
each Fund and all amendments thereto.
(e) Notification of Registration of the Trust under the Investment
Company Act on Form N-8A as filed with the Commission and all amendments
thereto;
(f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references to this
Agreement, the Prospectus and the Statement of Additional Information shall be
to such documents as most recently amended or supplemented and in effect.
4. The Adviser shall authorize and permit any of its directors,
officers and employees who may be elected as trustees or officers of the Trust
and/ or the Funds to serve in the capacities in which they are elected. All
services to be furnished by the Adviser under this Agreement may be furnished
through such directors, officers or employees of the Adviser.
5. The Adviser agrees that all records which it maintains for the Trust
and/or the Funds are property of the Trust and/or the Funds. The Adviser will
surrender promptly to the Trust and/or the Funds any such records upon either
the Trust's or the Fund's request. The Adviser further agrees to preserve such
records for the periods prescribed in Rule 3la-2 of the Commission under the
Investment Company Act.
6. (i) In connection with the services rendered by the Adviser under
this Agreement, the Adviser will pay all of the following expenses:
(a) the salaries and expenses of all personnel of the Trust, the
Funds and the Adviser required to perform the services to be
provided pursuant to this Agreement, except the fees of the
trustees who are not affiliated persons of the Adviser, and
(b) all expenses incurred by the Adviser, the Trust or by the
Funds in connection the performance of the Adviser's
responsibilities hereunder, other than brokers' commissions
and any issue or transfer taxes chargeable to each respective
Fund in connection with its securities transactions.
7. In the event the expenses of each Fund for any fiscal year
(including the fees payable to the Adviser but excluding interest, taxes,
brokerage commissions, distribution fees and litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business) exceed the lowest applicable annual expense limitation
established pursuant to the statutes or regulations of any jurisdictions in
which shares of each respective Fund are then qualified for offer and sale, the
compensation due the Adviser will
<PAGE>
be reduced by the amount of such excess, or, if such reduction exceeds the
compensation payable to the Adviser, the Adviser will pay each Fund, whose
expenses exceed such expense limitation, the amount of such reduction which
exceeds the amount of such compensation.
8. For the services provided and the expenses assumed pursuant to this
Agreement, each Fund will pay to the Adviser as compensation a at the rate set
forth opposite each Funds' name on Schedule 1 hereto, such fee to be accrued
daily and paid monthly..
9. The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,
employees or agents or controlling persons shall be liable for any error or
judgment or mistake of law, or for any loss suffered by the Trust and/or a Fund
in connection with or arising out of the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
10. As to each Fund, this Agreement shall continue until the date set
forth opposite such Fund's name on Schedule 1 hereto (the "Reapproval Date") and
shall continue automatically for successive annual periods ending on the day of
each year set forth opposite the Fund's name on Schedule 1 hereto (the
"Reapproval Day"), provided that such continuance is specifically approved at
least annually by the affirmative vote of (i) a majority of the Trustees of the
Trust acting separately on behalf of each Fund, who are not interested persons
of the Trust, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) a majority of the Trustees of the Trust or the holders
of a majority of the outstanding voting securities of each respective Fund;
provided however, that this Agreement may be terminated by the Trust, on behalf
of a Fund at any time, without the payment of any penalty, by the Trustees
acting on behalf of a Fund or by vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of a Fund, or by the
Adviser at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall terminate automatically in the event of its assignment provided that a
transaction which does not, under the Investment Company Act, result in a change
of actual control or management of the Adviser's business shall not be deemed to
be an assignment for the purposes of this Agreement.
11. This agreement shall terminate automatically in the event of its
assignment; the term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940.
12. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a trustee, officer
or employee of the Trust and/or the Funds to engage in any other business or to
devote his time and attention in part to the management or other aspect of any
business, whether of a similar or dissimilar nature, nor limit or restrict the
right of the Adviser to engage in any other business or to render services of
any kind to any other person or entity.
<PAGE>
13. During the term of this Agreement, the Trust and each Fund agrees
to furnish the Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of each Fund or the public, which
refer in any way to the Adviser, prior to use thereof and not to use such
material if the Adviser reasonably objects in writing within five business days
(or such other time as may be mutually agreed) after receipt. In the event of
termination of the Agreement, the Trust and/or each Fund will continue to
furnish to the Adviser such other information relating to the business affairs
of the Trust and/or each Fund as the Adviser at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
14. This Agreement may be amended by mutual agreement, but only after
authorization of such amendments by the affirmative vote of (i) the holders of
the majority of the outstanding voting securities of each Fund and ( ii) a
majority of the members of the Trustees who are not interested persons of the
Trust or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval.
15. The Adviser, the Trust and the Funds each agree that the name
"Northstar" is proprietary to, and a property right of, the Adviser. The Trusts
and the Funds agree and consent that (i) each will only use the name "Northstar"
as part of its name and for no other purpose, (ii) each will not purport to
grant any third party the right to use the name "Northstar" and (iii) upon the
termination of this Agreement, the Trust and the Funds shall, upon the request
of the Adviser, cease to use the name "Northstar", and shall use its best
efforts to cause its officers, trustees and shareholders to take any and all
actions which the Adviser may request to effect the foregoing.
16. Any notice or other communications required to be given pursuant to
this Agreement shall be deemed to be given if delivered or mailed by registered
mail, postage paid, (1) to the Adviser at Two Greenwich Plaza, Suite 100,
Greenwich, CT 06830, Attention: Secretary; or (2) to the Trust and/or the Funds,
Two Greenwich Plaza, Suite 100, Greenwich, CT 06830, Attention: Secretary.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut. The terms "interested person",
"assignment", and "vote of the majority of the outstanding securities" shall
have the meaning set forth in the Investment Company Act.
18. The Declaration of Trust, establishing the Trust, dated August 18,
1993, a copy of which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Northstar Series Trust" refers to the Trustees under the
Declaration collectively as trustees, but not individually or personally; and no
Trustee, shareholder, officer, employee or agent of the Trust and/or the Funds
may be held to any personal liability, nor may resort be had to their private
property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust, but the Trust property only shall be
liable.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year set
forth above.
<PAGE>
NORTHSTAR TRUST
Attest: __________________ By: __________________
President
NORTHSTAR INVESTMENT MANAGEMENT
CORPORATION
Attest: __________________ By: __________________
Sr. Vice President
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
ANNUAL FEE AS A PERCENTAGE
NAME OF FUND OF AVG. DAILY NET ASSETS REAPPROVAL DATE REAPPROVAL DAY
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
<S> <C> <C> <C>
Northstar Income and Growth 0.75 of 1% on first $250 November 8, 1995 November 8th
Fund million; 0.70% on the next
$250 million; 0.65% on the next $250 million;
0.60% on the next $250 million; and 0.55% on
assets in excess of $1 billion.
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
Northstar High Total Return 0.75 of 1% on first $250 November 8, 1995 November 8th
Fund million; 0.70% on the next
$250 million; 0.65% on the next $250 million;
0.60% on the next $250 million; and 0.55% on
assets in excess of $1 billion
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
Northstar Growth + Value Fund 1.00% July 31, 1998 July 31st
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
Northstar High Total Return 0.75% November 8, 1998 November 8th
Fund II
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
Northstar International Value 1.00% November 8, 1998 November 8th
Fund
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
Northstar Emerging Markets Value 1.00% November 8, 1998 November 8th
Fund
- ------------------------------- ------------------------------ ---------------------------- ---------------------------
</TABLE>
<PAGE>
EXHIBIT 5(A)
NORTHSTAR EMERGING MARKETS VALUE FUND
SUBADVISORY AGREEMENT
AGREEMENT made this 8th day of November, 1997 by and between Northstar
Investment Management Corporation, Delaware Corporation (hereinafter the
"Adviser"), investment adviser for the Northstar Emerging Markets Fund
(hereinafter the "Fund") a series of the Northstar Trust (the "Trust") and
Brandes Investment Partners, L.P., a California limited partnership (hereinafter
the "Subadviser").
WHEREAS, the Adviser has been retained by the Trust on behalf of the
Fund to provide investment advisory services to the Fund pursuant to an
Investment Advisory Agreement made on November 8, 1993, as amended and restated
November 8, 1997 (the "Investment Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who
are not "interested persons," as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), and the Fund's shareholders have approved the
appointment of the Subadviser to perform certain investment advisory services
for the Fund pursuant to this Subadvisory Agreement with the Adviser and the
Subadviser is willing to perform such services for the Fund;
WHEREAS, the Subadviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended ("Advisers Act") ;
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as
follows:
1. Appointment. The Adviser hereby appoints the Subadviser to perform
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Duties of Subadviser. The Adviser hereby authorizes Subadviser to
manage the investment and reinvestment of cash and investments comprising those
assets of the Fund with power on behalf of and in the name of the Fund at
Subadviser's discretion, subject at all times to the supervision of the Adviser
and the Trustees of the Fund:
(a) to direct the purchase, subscription or other acquisition, and
the sale, redemption, and exchange of investments, subject to the duty to render
to the Trustees of the Fund and the Adviser written reports of the composition
of the portfolio of the Fund as often as the Adviser or the Trustees of the Fund
shall reasonably require;
(b) to make all decisions relating to the manner, method, and
timing of investment transactions, to select brokers, dealers and other
intermediaries by or through whom such transactions will be effected, and to
engage such consultants, analysts and experts in connection therewith as may be
considered necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or
assets solely in order to execute investment transactions for the Fund, provided
the Subadviser shall have no authority to direct the transfer of the Fund's
funds or assets to itself or other affiliated persons and shall have no
authority over the disbursement (as opposed to investment decisions) of funds or
assets nor any custody of any of the Fund's funds or assets; and
(d) to take all such other actions as may be considered necessary
or appropriate to discharge its duties hereunder; PROVIDED THAT any specific or
general directions which the Trustees of the Fund or the Adviser may give in
writing to the Subadviser with regard to any of the foregoing powers shall,
unless the contrary is expressly stated herein, override the general authority
given by this provision to the extent that the Trustees of the Fund may, at any
time and from time to time, direct, either generally or to a limited extent and
either alone or in concert with the Adviser or the Subadviser (provided that
such directions would not cause the Subadviser to violate any fiduciary duties
or any laws with regard to the Subadviser's duties and responsibilities), all or
any of the same as they shall think fit and, in
<PAGE>
particular, the Adviser shall have the right to direct the Subadviser to place
trades through brokers and other agents of the Adviser's choice, subject to such
brokers or agents executing such trades on a "best execution basis", i.e. at the
best price and/or with research or other services which render that broker's
services the most appropriate for the Subadviser's needs, and further that the
Subadviser is satisfied that the dealing and execution quality of such brokers
are satisfactory to the Subadviser; and PROVIDED FURTHER that nothing herein
shall be construed as giving the Subadviser power to manage the aforesaid cash
and investments in such a manner as would cause the Fund to be considered a
"dealer" in stocks, securities or commodities for U.S. federal income tax
purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance
of the duties delineated in subparagraphs (a)-(d) above.
The Subadviser further agrees that, in performing its duties hereunder,
it will:
(a) (i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code of 1986, as amended,
(the "Code") and all other applicable federal and state laws and regulations,
the Prospectus and Statement of Additional Information for the Fund, and with
any applicable procedures adopted by the Trustees in writing and made available
to Subadviser; (ii) manage the Fund in accordance with the investment
requirements for regulated investment companies under Subchapter M of the Code
and regulations issued thereunder, and (iii) direct the placement of orders
pursuant to its investment determinations for the Fund directly with the issuer,
or with any broker or dealer, in accordance with applicable policies expressed
in the Fund's Prospectus and/or Statement of Additional Information and in
accordance with applicable legal requirements;
(b) furnish to the Fund whatever non-proprietary reports the Fund
may reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Subadviser will keep the Fund and the Trustees
informed of developments materially affecting the Fund's portfolio and shall, on
the Subadviser's own initiative, furnish to the Fund from time to time whatever
information the Subadviser believes appropriate for this purpose;
(c) make available to the Fund's administrator, Northstar
Administrators Corporation (the "Administrator"), the Adviser, and the Fund,
promptly upon their request, such copies of its investment records and ledgers
with respect to the Fund as may be required to assist the Adviser, the
Administrator and the Fund in their compliance with applicable laws and
regulations. The Subadviser will furnish the Trustees with such periodic and
special reports regarding the Fund as they may reasonably request;
(d) immediately notify the Adviser and the Fund in the event that
the Subadviser or any of its affiliates (i) becomes aware that it is subject to
a statutory disqualification that prevents the Subadviser from serving as an
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the Securities and Exchange Commission ("SEC") or other regulatory authority.
The Subadviser further agrees to notify the Fund and the Adviser immediately of
any material fact known to the Subadviser respecting or relating to the
Subadviser that is not contained in the Fund's Registration Statement, or any
amendment or supplement thereto, but that is required to be disclosed therein,
and of any statement contained therein respecting or relating to the Subadviser
that becomes untrue in any material respect. The Adviser shall likewise
immediately notify the Subadviser if it becomes aware of any regulatory action
of the type described in this subparagraph 2(d) respecting or relating to the
Fund, the Adviser, or any Affiliates of the Adviser.
3. Allocation of Charges and Expenses. The Subadviser shall pay all
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its partners, officers and employees, and
other internal operating costs. The Fund shall bear its own overhead and other
internal operating costs (whether incurred directly or by the Adviser or the
Subadviser) including, without limitation:
(a) the costs incurred by the Fund in the preparation and printing
of its Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to investors
subscribing for shares);
<PAGE>
(b) all fees and expenses on behalf of the Fund to the Transfer
Agent and the Custodian;
(c) the reasonable fees and expenses of accountants, auditors,
lawyers and other professional advisors to the Fund;
(d) any interest, fee or charge payable on or on account of any
borrowing by the Fund;
(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share
capital of the Fund;
(f) the fees of any stock exchange or over-the-counter market on
which the shares may from time to time be listed, quoted or dealt in and the
expenses of obtaining any such listing, quotation or permission to deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect
of or in connection with the acquisition, holding or disposal of any of the
assets of the Fund or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares in
newspapers and other publications;
(j) all expenses incurred in the convening of meetings of
shareholders or in the preparation of agreements or other documents relating to
the Fund or in relation to the safe custody of the documents of title of any
investments;
(k) all Trustees communication costs; and
(1) all premiums and costs for Fund insurance and blanket fidelity
bonds.
4. Compensation. The Subadviser agrees to waive all compensation until
the Fund's net assets exceed $25 million or until April 1, 1998, whichever comes
first. After the Fund's net assets exceed $25 million or April 1, 1998,
whichever comes first, the Adviser will pay the Subadviser at the end of each
calendar month an advisory fee computed daily at an annual rate equal to fifty
(50) percent of the management fee that the Fund pays the Adviser.
5. Books and Records. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by applicable laws or regulations. The Subadviser also agrees that
records it maintains and preserves pursuant to Rules 31a-2 under the 1940 Act
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Fund and will be surrendered promptly
to the Fund upon its request and the Subadviser further agrees that it will
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in
order to determine whether the operations of the Fund are being conducted in
accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Subadviser shall
exercise its best business judgment and reasonable care in rendering the
services provided by it under this Subadvisory Agreement. The Subadviser shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund or the holders of the Fund's shares or by the Adviser in
connection with the matters to which this Subadvisory Agreement relates,
provided that nothing in this Subadvisory Agreement shall be deemed to protect
or purport to protect the Subadviser against liability to the Fund or to holders
of the Fund's shares or to the Adviser to which the Subadviser would otherwise
be subject by reason of willful misfeasance, bad faith or negligence on its part
in the performance of its duties or by reason of the Subadviser's reckless
disregard of its obligations and duties under this Subadvisory Agreement. As
used
<PAGE>
in this Section 6, the term "Subadviser" shall include any officers, directors,
employees or other affiliates of the Subadviser performing services for the
Fund.
7. Services Not Exclusive. It is understood that, except as may
otherwise be agreed by the Adviser and the Subadviser, the services of the
Subadviser are not exclusive. The Subadviser is not required to recommend to the
Fund the same investments it recommends to its other clients. In connection with
purchases or sales of portfolio securities for the account of the Fund, neither
the Subadviser nor any of its partners officers or employees shall act as
principal or agent or receive any commission. If the Subadviser provides any
advice to its clients concerning the shares of the Fund, the Subadviser shall
act solely as investment counsel for such clients and not in any way on behalf
of the Fund.
8. Duration and Termination. This Subadvisory Agreement shall continue
in effect for a period of two years unless sooner terminated as provided herein
and shall continue automatically for successive annual periods provided that
such continuance is specifically approved at least annually by the affirmative
vote of (i) a majority of the Trustees of the Trust who are not interested
persons of the Trust (as defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval, and (ii) a majority of the
Trustees of the Trust or the holders of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act). Notwithstanding the
foregoing, this Subadvisory Agreement may be terminated: (a) at any time without
penalty by the Fund or Adviser upon the vote of a majority of the Trustees or by
vote of the majority of the Fund's outstanding voting securities (as defined in
the 1940 Act), upon sixty (60) days' written notice to the Subadviser, or (b) by
the Subadviser at any time without penalty, upon (60) days' written notice to
the Fund or Adviser. This Subadvisory Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act) or the
assignment or termination of the Investment Advisory Agreement.
9. Amendments. No provision of this Subadvisory Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by both parties, and no material amendment of this Subadvisory
Agreement shall be effective until approved by an affirmative vote of (i) a
majority of the outstanding voting securities of the Fund, and (ii) a majority
of the Trustees of the Fund, including a majority of Trustees who are not
interested persons of any party to this Subadvisory Agreement, cast in person at
a meeting called for the purpose of voting on such approval, if such approval is
required by applicable law.
10. Indemnification. (a) The Adviser hereby agrees to indemnify the
Subadviser from and against all liabilities, losses, expenses, reasonable
attorneys' fees and costs or damages (other than liabilities, losses, expenses,
attorneys fees and costs or damages arising from the Subadviser failing to meet
the standard of care required hereunder in the performance by the Subadviser of,
or its failure to perform, the services required hereunder), arising from: (i)
the Adviser's (or its affiliates' and their respective agents' and employees')
failure to perform its duties or assume its obligations hereunder, or from its
wrongful actions or omissions, including, but not limited to claims asserted or
threatened by any shareholder of the Fund, governmental or regulatory agency, or
any other person; (ii) claims arising from any wrongful act by the Fund or any
of the Fund's trustees, officers, employees, or representatives, or by the
Adviser, its officers, employees or representatives, or from any actions by the
Fund's distributors or any representative of the Fund; (iii) any action or claim
against the Subadviser based on any alleged untrue statement or misstatement of
material fact in any registration statement, prospectus, shareholder report or
other information or materials relating to the Fund or shares issued by the Fund
or any amendment thereof or supplement thereto, or the failure or alleged
failure to state therein a material fact required to be stated in order that the
statements therein are not misleading, provided that such claim is not based
upon information provided to the Adviser by the Subadviser or which facts or
information of a material nature the Subadviser failed to provide or disclose.
With respect to any claim for which the Subadviser shall be entitled to
indemnity hereunder, the Adviser shall assume the reasonable expenses and costs
(including any reasonable attorneys' fees and costs) of the Subadviser of
investigating and/or defending any claim asserted or threatened by any party,
subject always to the Adviser first receiving a written undertaking from the
Subadviser to repay any amounts paid on its behalf in the event and to the
extent of any subsequent final determination by a court that the Subadviser was
not entitled to indemnification hereunder in respect of such claim.
(b) The Subadviser hereby agrees to indemnify the Adviser, its
affiliates and the Fund from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs or damages (other than liabilities, losses,
expenses,
<PAGE>
attorneys fees and costs or damages arising from the Adviser's failure to
perform its responsibilities hereunder or claims arising from its acts or
failure to act in performing this Agreement) arising from Subadviser's or its
agents' and employees' failure to perform its duties and assume its obligations
hereunder, or from any failure of Subadviser to meet the standard of care set
forth in Section 6 of this Agreement, including any action or claim against the
Adviser based on any alleged untrue statement or misstatement of a material fact
made or provided by the Subadviser contained in any registration statement,
prospectus, shareholder report or other information or materials relating to the
Fund or shares issued by the Fund, or the failure or alleged failure to state a
material fact therein required to be stated in order that the statements therein
are not misleading, which fact should have been made or provided by the
Subadviser to the Adviser. With respect to any claim for which the Adviser is
entitled to indemnity hereunder, the Subadviser shall assume the reasonable
expenses and costs (including any reasonable attorneys' fees and costs) of the
Adviser of investigating and/or defending any claim asserted or threatened by
any party, subject always to the Subadviser first receiving a written
undertaking from the Adviser to repay any amounts paid on its behalf in the
event and to the extent of any subsequent final determination by a court that
the Adviser was not entitled to indemnification hereunder in respect of such
claim.
(c) In the event that the Subadviser or Adviser is or becomes a
party to any action or proceedings in respect of which indemnification may be
sought hereunder, the party seeking indemnification (the "Indemnitee") shall
promptly notify the other party thereof. After becoming notified of the same,
the party from whom indemnification is sought (the "Indemnitor") shall be
entitled to participate in any such action or proceeding and shall assume any
payment for the full defense of the Indemnitee therein with counsel reasonably
satisfactory to the party seeking indemnification. The Indemnitor shall not, in
connection with any action or proceeding or separate but similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegation or circumstances, be liable for the fees or expenses of more than one
separate firm of attorneys at any time for Indemnitees. After properly assuming
the defense thereof, the Indemnitor shall not be liable hereunder to the
Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof, other than damages, if any,
by way of judgment, settlement, or otherwise pursuant to this provision. The
Indemnitor shall not be liable hereunder for any settlement of any action or
claim effected without its written consent, which consent shall not be
unreasonably withheld. The Indemnitee shall fully cooperate with the Indemnitor
in the defense of any claim and any litigation or other legal proceedings
resulting from the claim. The Indemnitee may participate in the defense of the
claim and any litigation or other legal proceedings resulting from the claim.
The Indemnitee may employ separate counsel to participate in such defense, and
the fees and expenses of such counsel shall not be at the expense of the
Indemnitee, but only if the employment thereof (a) has been specifically
authorized in writing by the Indemnitor, which authorization shall not be
unreasonably withheld and (b) relates to the defense of any claim or any
litigation or other legal proceedings resulting from the claim to the extent the
claim or any litigation or other legal proceedings resulting from the claim
seeks injunctive, specific performance or other nonmonetary relief involving or
affecting the business, operations or assets of the Indemnitee (or an Affiliate
of the Indemnitee).
The provisions of this Section 10 shall survive the termination of this
Agreement.
11. Independent Contractor. Subadviser shall for all purposes of this
Agreement be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or represent
the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise,
the Fund, the Adviser and their respective affiliates, agents and employees
shall not be deemed agents of the Subadviser and shall have no authority to bind
Subadviser.
12. Use of Names. (a) The Fund may, subject to sub-clause (b) below,
use the name, "Brandes Investment Partners, L.P. ." ("Brandes") or the name of
any principal of Brandes, or any component, abbreviation or other name derived
therefrom for promotional purposes only for so long as this Subadvisory
Agreement (or any extension, renewal or amendment thereof) continues in force,
unless the Subadviser or such principal shall specifically consent in writing to
such continued use thereafter. Any permitted use by the Fund during the term
hereof of the name of the Subadviser or any of its principals, or any derivative
thereof, shall in no way prevent the Subadviser or any of it shareholders or any
of their successors, from using or permitting the use of such name (whether
singly or in any combination with any other words) for, by or in connection with
an entity or enterprise other than the Fund. At the conclusion of this
Subadvisory Agreement or in the event of any termination of this Subadvisory
Agreement for any reason, each of the
<PAGE>
authorized parties and their respective employees, representatives, affiliates,
and associates agree that they shall immediately cease using each such name and
any derivatives of said names for any purpose whatsoever.
(b) The Adviser and its affiliates on one hand, and the Subadviser
on the other, shall not publish or distribute, and the Adviser shall cause the
Fund not to publish or distribute to Fund shareholders, prospective investors,
sales agents or members of the public, any disclosure document, offering
literature (including any form of advertisement or other solicitation materials
calculated to lead investors to subscribe for and purchase shares of the Fund)
or other document referring by name to the Subadviser or its affiliates on one
hand and the Adviser or its affiliates on the other, unless the other party
shall have consented in writing to such references in the form and context in
which they appear.
13. Change in Identity. The Subadviser shall notify the Adviser of any
change in the identity or control of its general or limited partners promptly
after such change occurs.
14. Miscellaneous.
(a) This Subadvisory Agreement shall be governed by the laws of
the State of Massachusetts (without regard to principles of conflicts of law),
provided that nothing herein shall be construed in a manner inconsistent with
the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed to constitute one and the same
instrument.
15. Notices. Any notice, instruction or other instrument required or
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent
by prepaid registered mail, express mail or by facsimile to the parties at such
offices or such other address as may be notified by either party from time to
time addressed to its President. Such notice, instruction or other instrument
shall be deemed to have been served, in the case of a registered letter at the
expiration of seventy-two (72) hours after posting; in the case of express mail,
within twenty-four (24) hours after dispatch; and in the case of facsimile,
immediately on dispatch; and if delivered outside normal business hours it shall
be deemed to have been received at the next time after delivery or transmission
when normal business hours commence. Evidence that the notice, instruction or
other instrument was properly addressed, stamped and put into the post shall be
conclusive evidence of posting.
16. Attorneys' Fees. In the event of a material breach of this
Agreement by any party hereto, the prevailing party, as determined by the trier
of fact, shall be entitled to reasonable attorneys' fees and costs as determined
by the court in such action, in addition to any other damages awarded.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year set forth
above.
Northstar Investment Management Corporation
By:_____________________________________
Mark L. Lipson
Chairman and CEO
Brandes Investment Partners, L.P.
<PAGE>
By:______________________________________
Charles H. Brandes
Managing Director
EXHIBIT 6
UNDERWRITING AGREEMENT FOR
CLASS A SHARES OF
NORTHSTAR TRUST
NORTHSTAR HIGH TOTAL RETURN FUND
NORTHSTAR INCOME AND GROWTH FUND
NORTHSTAR GROWTH + VALUE FUND
NORTHSTAR HIGH TOTAL RETURN FUND II
NORTHSTAR INTERNATIONAL VALUE FUND
NORTHSTAR EMERGING MARKETS VALUE FUND
AGREEMENT made and entered into by and between NORTHSTAR HIGH TOTAL RETURN FUND,
NORTHSTAR INCOME AND GROWTH FUND, NORTHSTAR GROWTH + VALUE FUND, NORTHSTAR HIGH
TOTAL RETURN FUND II, NORTHSTAR INTERNATIONAL VALUE FUND and NORTHSTAR EMERGING
MARKETS VALUE FUND (each a "Fund" and collectively the "Funds"), each a series
of NORTHSTAR TRUST, a Massachusetts business trust (the "Trust"), and NORTHSTAR
DISTRIBUTORS, INC., a Minnesota corporation (the "Underwriter") on November 8,
1993, and amended and restated on November 8, 1997.
1. Each Fund hereby appoints the Underwriter as its exclusive agent to promote
the sale and to arrange for the sale of Class A shares of beneficial interest of
each Fund, including both unissued shares and treasury shares, through
broker-dealers of otherwise, in all parts of the United States and elsewhere
throughout the world. Each Fund agrees to sell and deliver its Class A shares,
upon the terms hereinafter set forth, as long as it has unissued and/or treasury
Class A shares available for sale.
(a) Each Fund hereby authorizes the Underwriter, subject to law and the
Declaration of Trust, to accept, for the respective account of each Fund, orders
for the purchase of its Class A shares, satisfactory to the Underwriter, as of
the time of receipt of such orders by the dealer-- or as otherwise described in
the Prospectus of the Trust.
(b) The public offering price of Class A shares shall be the net asset value per
share (as determined by each Fund) of the outstanding Class A shares of each
Fund. The net asset value shall be regularly determined on every business day as
of the time of the regular closing of the New York Stock Exchange and the public
offering price based upon such net asset value shall become effective as set
forth from time to time in the Trust's Prospectus; such net asset value shall
also be regularly determined, and the public offering price based thereon shall
become effective, as of such other times for the regular determination of net
asset value as may be required or permitted by rules of the National Association
of Securities Dealers, Inc. or of the Securities and Exchange Commission. Each
Fund shall furnish daily to the Underwriter, with all possible promptness, a
detailed computation of net asset value of its Class A shares.
<PAGE>
The public offering price of such shares shall be equal to the net asset value,
as described above, plus a commission to be fixed from time to time by the
Underwriter not to exceed 6% of the public offering price, except that such
price per share may be adjusted to the nearest cent. The Underwriter may fix
quantity discounts and other similar terms not inconsistent with the provisions
of the Investment Company Act of 1940. The Underwriter shall not impose any
commission, permit any quantity discounts or impose any other similar terms in
connection with the sale of Class A shares of each Fund except as disclosed in
the Prospectus of the Trust.
(c) The Underwriter shall be entitled to deduct a commission on all Class A
shares sold equal to the difference between the public offering price and the
net asset value on which such price is based. If any such commission is received
by a Fund, it will pay the commission to the Underwriter. Out of such
commission, the Underwriter may allow to dealers such concessions as the
Underwriter may determine from time to time. Notwithstanding anything in the
Agreement, sales may be made at net asset value as provided in the Trust's
prospectus. .
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class A shares of each Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class A shares of each Fund as such arrangements may profitably be made; but
so long as its does so, nothing herein contained shall prevent the Underwriter
from entering into similar arrangements with other funds and to engage in other
activities. Each Fund reserves the right to issue Class A shares in connection
with any merger or consolidation of a Fund with any other investment company or
any personal holding company or in connection with offers of exchange exempted
from Section 22(d) of the Investment Company Act 1940.
3. To the extent a Fund shall offer (as set forth in the Trust's Prospectus) to
provide physical certificates evidencing ownership of Class A shares, upon
receipt by a Fund at its principal place of business of a written order from the
Underwriter, together with delivery instructions, the Fund shall, as promptly as
practicable, cause certificates for the Class A shares called for in such order
to be delivered or credited in such amounts and in such names as shall be
specified by the Underwriter, against payment therefor in such manner as may be
acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in connection
with sales of the Class A shares of each Fund shall be subject to the approval
of the respective Fund to which such literature relates. Each Fund authorizes
the Underwriter in connection with the sale or arranging for the sale of its
Class A shares to give only such information and to make only such statements or
representations as are contained in the Prospectus or in sales literature or
advertisements approved by each respective Fund or in such financial statements
and reports as are furnished to the Underwriter pursuant to paragraph 6 below.
The Funds shall not be responsible in any way for any information, statements or
representations given
<PAGE>
or made by the Underwriter or its representatives or agents other than such
information, statements and representations.
5. The Underwriter, as agent of each Fund, is authorized, subject to the
direction of each Fund, to accept Class A shares for redemption at prices not in
excess of their net asset value, determined as prescribed in the Prospectus of
the Trust. Each respective Fund shall reimburse the Underwriter monthly for its
out-of-pocket expenses reasonably incurred on behalf of each Fund in carrying
out the foregoing authorization, but the Underwriter shall not be entitled to
any commissions or other compensation in respect to such redemptions. The
Underwriter shall report all redemptions promptly to the respective Funds.
6. Each Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of each Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class A shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. Each Fund will pay or cause to be paid expenses (including counsel fees and
disbursements) of any registration of its Class A shares of beneficial interest
under, but not limited to, Federal, state or other regulatory authority, fees of
filing periodic reports with regulatory bodies and of preparing, setting in type
and printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class A shares of each Fund, for fees and
expenses incident to the issuance of Class A shares of beneficial interest, such
as the cost of stock certificates (if offered), issuance taxes, fees of the
transfer agent, including the cost of preparing and mailing notices to
shareholders pertaining to transactions with respect to shareholders' accounts,
dividend disbursing agent's costs, including the cost for preparing and mailing
notices confirming shares acquired by shareholders pursuant to the reinvestment
of dividends and distributions, and the mailing to shareholders of prospectuses,
and notices and reports as may be required from time to time by regulatory
bodies or for such other purposes, except for purposes of sales by the
Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Funds and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class A shares of each Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
A shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by each Fund with any Federal or state law or other regulatory
<PAGE>
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to a Fund's distribution
plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940.
9. Each Fund agrees to register, from time to time as necessary, additional
Class A shares with the Securities & Exchange Commission, State and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or that their may be no omission to state a material fact therein
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As used in this Agreement, the term
" Registration Statement" shall mean the Registration Statement most recently
filed by the Trust with the Securities & Exchange Commission and effective under
the Securities Act of 1933, as amended, as such Registration Statement is
amended from time to time, and the term "Prospectus" shall mean the most recent
form of prospectus authorized by the Trust for use by the Underwriter and by
dealers.
10. This Agreement may be terminated at any time on not more than 60 days
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the class of outstanding voting securities of each respective Fund
or by vote of a majority of the Trustees, acting separately on behalf of each
Fund, who are not "interested persons" of the Funds and who have not direct or
indirect financial interest in the operation of the Plan or in any agreements.
11. This Agreement shall terminate automatically in the event of its assignment.
The term "assignment" for this purpose shall have the meaning defined in Section
2(a) (4) of the Investment Company Act of 1940.
12. This Agreement has been approved by the Trustees of the Trust on behalf of
the Funds and shall continue in effect for two years from its effective date.
Thereafter, this Agreement shall continue for successive annual periods,
provided that such continuance is specifically approved annually by a majority
of the Trustees who are not interested persons of the parties hereto as defined
in the Investment Company Act of 1940 and either (a) by vote of the Trustees of
the Trust or (b) by vote of a majority or the outstanding voting securities of
each Fund, as defined in the Investment Company Act of 1940.
13. The Declaration of Trust, establishing the Trust, dated August 18, 1993, a
copy of which together with all amendments thereto (the "Declaration") is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name of the Trust refers to the Trustees under the Declaration
collectively as trustees, but not individually or personally; and no Trustee,
shareholder officer, employee or agent of the Trust and/or the Funds may be held
to any personal liability, nor may resort be had to their private property for
the satisfaction of any obligation or claim or otherwise in connection with
affairs of the Trust, but the Trust property only shall be liable.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized and to become effective as of the
day and year set forth above.
Attest: NORTHSTAR TRUST
By: ________________________ By: _____________________________
Attest: NORTHSTAR DISTRIBUTORS, INC.
By: ________________________ By: _____________________________
<PAGE>
UNDERWRITING AGREEMENT FOR
CLASS B SHARES OF
NORTHSTAR TRUST
NORTHSTAR HIGH TOTAL RETURN FUND
NORTHSTAR INCOME AND GROWTH FUND
NORTHSTAR GROWTH + VALUE FUND
NORTHSTAR HIGH TOTAL RETURN FUND II
NORTHSTAR INTERNATIONAL VALUE FUND
NORTHSTAR EMERGING MARKETS VALUE FUND
AGREEMENT made and entered into by and between NORTHSTAR HIGH TOTAL RETURN FUND,
NORTHSTAR INCOME AND GROWTH FUND, NORTHSTAR GROWTH + VALUE FUND, NORTHSTAR HIGH
TOTAL RETURN FUND II, NORTHSTAR INTERNATIONAL VALUE FUND and NORTHSTAR EMERGING
MARKETS VALUE FUND (each a "Fund" and collectively the "Funds"), each a series
of NORTHSTAR TRUST, a Massachusetts business trust (the "Trust"), and NORTHSTAR
DISTRIBUTORS, INC., a Minnesota corporation (the "Underwriter") on November 8,
1993, and amended and restated on November 8, 1997.
1. Each Fund hereby appoints the Underwriter as its exclusive agent to promote
the sale and to arrange for the sale of Class B shares of beneficial interest of
each Fund, including both unissued shares and treasury shares, through
broker-dealers of otherwise, in all parts of the United States and elsewhere
throughout the world. Each Fund agrees to sell and deliver its Class B shares,
upon the terms hereinafter set forth, as long as it has unissued and/or treasury
Class B shares available for sale.
(a) Each Fund hereby authorizes the Underwriter, subject to law and the
Declaration of Trust, to accept, for the respective account of each Fund, orders
for the purchase of its Class B shares, satisfactory to the Underwriter, as of
the time of receipt of such orders by the dealer-- or as otherwise described in
the Prospectus of the Trust.
(b) The public offering price of Class B shares shall be the net asset value per
share (as determined by each Fund) of the outstanding Class B shares of each
Fund. The net asset value shall be regularly determined on every business day as
of the time of the regular closing of the New York Stock Exchange and the public
offering price shall become effective as set forth from time to time in the
Prospectus; such net asset value shall also be regularly determined, and the
public offering price shall become effective, as of such other times for the
regular determination of net asset value as may be required or permitted by
rules of the National Association of Securities Dealers, Inc. or of the
Securities and Exchange Commission. Each Fund shall furnish daily to the
Underwriter, with all possible promptness, a detailed computation of net asset
value of its Class B shares.
<PAGE>
(c) As compensation for providing services under this Agreement, (i) the
Underwriter shall receive from each Fund distribution and service fees under the
terms and conditions set forth in each respective Distribution Plan for each
Fund adopted under Rule 12b-1 under the Investment Company Act of 1940, as
amended, as that Plan may be amended from time to time and subject to any
further limitations on such fees as the Trustees may impose, and (ii) the
Underwriter shall receive from each Fund all contingent deferred sales charges
applied on redemption of Class B shares of such Fund. Whether and to what extent
a contingent deferred sales charge will be imposed with respect to a redemption
shall be determined in accordance with, and in a manner set forth in, the
Trust's Prospectus.
(d) The Underwriter may reallow any or all of the distribution and services fees
and contingent deferred sales charges which it is paid under the Agreement to
such dealers as the Underwriter may from time to time determine.
(e) The Underwriter may fix quantity discounts and other similar variances or
waivers of the contingent deferred sales charge not inconsistent with the
provisions of the Investment Company Act of 1940; provided however, that the
Underwriter shall not impose any commission, permit any quantity discount, or
impose any other similar waiver or variance in connection with the sale of Class
B shares except as disclosed in the Prospectus of the Trust.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class B shares of each Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class B shares of each Fund as such arrangements may profitably be made; but
so long as its does so, nothing herein contained shall prevent the Underwriter
from entering into similar arrangements with other funds and to engage in other
activities. Each Fund reserves the right to issue Class B shares in connection
with any merger or consolidation of a Fund with any other investment company or
any personal holding company or in connection with offers of exchange exempted
from Section 22(d) of the Investment Company Act 1940.
3. To the extent a Fund shall offer (as set forth in the Trust's Prospectus) to
provide physical certificates evidencing ownership of Class B shares, upon
receipt by a Fund at its principal place of business of a written order from the
Underwriter, together with delivery instructions, the Fund shall, as promptly as
practicable, cause certificates for the Class B shares called for in such order
to be delivered or credited in such amounts and in such names as shall be
specified by the Underwriter, against payment therefor in such manner as may be
acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in connection
with sales of the Class B shares of each Fund shall be subject to the approval
of the respective Fund to which such literature relates. Each Fund authorizes
the Underwriter in connection with the sale or arranging for the sale of its
Class B shares to give only such information and to make only such statements or
representations as are contained in the Prospectus or in sales literature or
advertisements approved by each respective Fund or in such financial statements
and reports as are furnished to the Underwriter pursuant to paragraph 6 below.
The Funds
<PAGE>
shall not be responsible in any way for any information, statements or
representations given or made by the Underwriter or its representatives or
agents other than such information, statements and representations.
5. The Underwriter, as agent of each Fund, is authorized, subject to the
direction of each Fund, to accept Class B shares for redemption at prices
determined as prescribed in the Prospectus of the Trust. Such price shall
reflect the subtraction of the applicable contingent deferred sales charge, if
any, computed in accordance with and in the manner set forth in the Trust's
Prospectus. Each respective Fund shall reimburse the Underwriter monthly for its
out-of-pocket expenses reasonably incurred on behalf of each Fund in carrying
out the foregoing authorization. The Underwriter shall report all redemptions
promptly to the respective Funds.
6. Each Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of each Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class B shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. Each Fund will pay or cause to be paid expenses (including counsel fees and
disbursements) of any registration of its Class B shares of beneficial interest
under, but not limited to, Federal, state or other regulatory authority, fees of
filing periodic reports with regulatory bodies and of preparing, setting in type
and printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class B shares of each Fund, for fees and
expenses incident to the issuance of Class B shares of beneficial interest, such
as the cost of stock certificates (if offered), issuance taxes, fees of the
transfer agent, including the cost of preparing and mailing notices to
shareholders pertaining to transactions with respect to shareholders' accounts,
dividend disbursing agent's costs, including the cost for preparing and mailing
notices confirming shares acquired by shareholders pursuant to the reinvestment
of dividends and distributions, and the mailing to shareholders of prospectuses,
and notices and reports as may be required from time to time by regulatory
bodies or for such other purposes, except for purposes of sales by the
Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Funds and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class B shares of each Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
B shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or
<PAGE>
other communication to shareholders, to the extent that such expenses are
necessarily incurred to effect compliance by each Fund with any Federal or state
law or other regulatory bodies); and (c) expenses of advertising in connection
with such offering; provided, however, that the Underwriter shall not be
required to pay for any such expenses to the extent that they are paid pursuant
to a Fund's distribution plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940.
9. Each Fund agrees to register, from time to time as necessary, additional
Class B shares with the Securities & Exchange Commission, State and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or that their may be no omission to state a material fact therein
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As used in this Agreement, the term
" Registration Statement" shall mean the Registration Statement most recently
filed by the Trust with the Securities & Exchange Commission and effective under
the Securities Act of 1933, as amended, as such Registration Statement is
amended from time to time, and the term "Prospectus" shall mean the most recent
form of prospectus authorized by the Trust for use by the Underwriter and by
dealers.
10. This Agreement may be terminated at any time on not more than 60 days
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the class of outstanding voting securities of each respective Fund
or by vote of a majority of the Trustees, acting separately on behalf of each
Fund, who are not "interested persons" of the Funds and who have not direct or
indirect financial interest in the operation of the Plan or in any agreements.
11. This Agreement shall terminate automatically in the event of its assignment.
The term "assignment" for this purpose shall have the meaning defined in Section
2(a) (4) of the Investment Company Act of 1940.
12. This Agreement has been approved by the Trustees of the Trust on behalf of
the Funds and shall continue in effect for two years from its effective date.
Thereafter, this Agreement shall continue for successive annual periods,
provided that such continuance is specifically approved annually by a majority
of the Trustees who are not interested persons of the parties hereto as defined
in the Investment Company Act of 1940 and either (a) by vote of the Trustees of
the Trust or (b) by vote of a majority or the outstanding voting securities of
each Fund, as defined in the Investment Company Act of 1940.
13. The Declaration of Trust, establishing the Trust, dated August 18, 1993, a
copy of which together with all amendments thereto (the "Declaration") is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name of the Trust refers to the Trustees under the Declaration
collectively as trustees, but not individually or personally; and no Trustee,
shareholder officer, employee or agent of the Trust and/or the Funds may be held
to any personal liability, nor may resort be had to their private property
<PAGE>
for the satisfaction of any obligation or claim or otherwise in connection with
affairs of the Trust, but the Trust property only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized and to become effective as of the
day and year set forth above.
Attest: NORTHSTAR TRUST
By: ________________________ By: _____________________________
Attest: NORTHSTAR DISTRIBUTORS, INC.
By: ________________________ By: _____________________________
<PAGE>
UNDERWRITING AGREEMENT FOR
CLASS C SHARES OF
NORTHSTAR TRUST
NORTHSTAR HIGH TOTAL RETURN FUND
NORTHSTAR INCOME AND GROWTH FUND
NORTHSTAR GROWTH + VALUE FUND
NORTHSTAR HIGH TOTAL RETURN FUND II
NORTHSTAR INTERNATIONAL VALUE FUND
NORTHSTAR EMERGING MARKETS VALUE FUND
AGREEMENT made and entered into by and between NORTHSTAR HIGH TOTAL RETURN FUND,
NORTHSTAR INCOME AND GROWTH FUND, NORTHSTAR GROWTH + VALUE FUND, NORTHSTAR HIGH
TOTAL RETURN FUND II, NORTHSTAR INTERNATIONAL VALUE FUND and NORTHSTAR EMERGING
MARKETS VALUE FUND (each a "Fund" and collectively the "Funds"), series of
NORTHSTAR TRUST, a Massachusetts business trust (the "Trust"), and NORTHSTAR
DISTRIBUTORS, INC., a Minnesota corporation (the "Underwriter") on November 8,
1993, and amended and restated on November 8, 1997.
1. Each Fund hereby appoints the Underwriter as its exclusive agent to promote
the sale and to arrange for the sale of Class C shares of beneficial interest of
each Fund, including both unissued shares and treasury shares, through
broker-dealers of otherwise, in all parts of the United States and elsewhere
throughout the world. Each Fund agrees to sell and deliver its Class C shares,
upon the terms hereinafter set forth, as long as it has unissued and/or treasury
Class C shares available for sale.
(a) Each Fund hereby authorizes the Underwriter, subject to law and the
Declaration of Trust, to accept, for the respective account of each Fund, orders
for the purchase of its Class C shares, satisfactory to the Underwriter, as of
the time of receipt of such orders by the dealer-- or as otherwise described in
the Prospectus of the Trust.
(b) The public offering price of Class C shares shall be the net asset value per
share (as determined by each Fund) of the outstanding Class C shares of each
Fund. The net asset value shall be regularly determined on every business day as
of the time of the regular closing of the New York Stock Exchange and the public
offering price shall become effective as set forth from time to time in the
Prospectus; such net asset value shall also be regularly determined, and the
public offering price shall become effective, as of such other times for the
regular determination of net asset value as may be required or permitted by
rules of the National Association of Securities Dealers, Inc. or of the
Securities and Exchange Commission. Each Fund shall furnish daily to the
Underwriter, with all possible promptness, a detailed computation of net asset
value of its Class C shares.
<PAGE>
(c) As compensation for providing services under this Agreement, (i) the
Underwriter shall receive from each Fund distribution and service fees under the
terms and conditions set forth in the Class C Distribution Plan for each Fund
adopted under Rule 12b-1 under the Investment Company Act of 1940, as amended,
as that Plan may be amended from time to time and subject to any further
limitations on such fees as the Trustees may impose, and (ii) the Underwriter
shall receive from each Fund all contingent deferred sales charges applied on
redemption of Class C shares of such Fund. Whether and to what extent a
contingent deferred sales charge will be imposed with respect to a redemption
shall be determined in accordance with, and in a manner set forth in, the
Trust's Prospectus.
(d) The Underwriter may reallow any or all of the distribution and services fees
and contingent deferred sales charges which it is paid under the Agreement to
such dealers as the Underwriter may from time to time determine.
(e) The Underwriter may fix quantity discounts and other similar variances or
waivers of the contingent deferred sales charge not inconsistent with the
provisions of the Investment Company Act of 1940; provided however, that the
Underwriter shall not impose any commission, permit any quantity discount, or
impose any other similar waiver or variance in connection with the sale of Class
C shares except as disclosed in the Prospectus of the Trust.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class C shares of each Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class B shares of each Fund as such arrangements may profitably be made; but
so long as its does so, nothing herein contained shall prevent the Underwriter
from entering into similar arrangements with other funds and to engage in other
activities. Each Fund reserves the right to issue Class C shares in connection
with any merger or consolidation of a Fund with any other investment company or
any personal holding company or in connection with offers of exchange exempted
from Section 22(d) of the Investment Company Act 1940.
3. To the extent a Fund shall offer (as set forth in the Trust's Prospectus) to
provide physical certificates evidencing ownership of Class C shares, upon
receipt by a Fund at its principal place of business of a written order from the
Underwriter, together with delivery instructions, the Fund shall, as promptly as
practicable, cause certificates for the Class C shares called for in such order
to be delivered or credited in such amounts and in such names as shall be
specified by the Underwriter, against payment therefor in such manner as may be
acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in connection
with sales of the Class C shares of each Fund shall be subject to the approval
of the respective Fund to which such literature relates. Each Fund authorizes
the Underwriter in connection with the sale or arranging for the sale of its
Class C shares to give only such information and to make only such statements or
representations as are contained in the Prospectus or in sales literature or
advertisements approved by each respective Fund or in such financial statements
and reports as are furnished to the Underwriter pursuant to paragraph 6 below.
The Funds
<PAGE>
shall not be responsible in any way for any information, statements or
representations given or made by the Underwriter or its representatives or
agents other than such information, statements and representations.
5. The Underwriter, as agent of each Fund, is authorized, subject to the
direction of each Fund, to accept Class C shares for redemption at prices
determined as prescribed in the Prospectus of the Trust. Such price shall
reflect the subtraction of the applicable contingent deferred sales charge, if
any, computed in accordance with and in the manner set forth in the Trust's
Prospectus. Each respective Fund shall reimburse the Underwriter monthly for its
out-of-pocket expenses reasonably incurred on behalf of each Fund in carrying
out the foregoing authorization. The Underwriter shall report all redemptions
promptly to the respective Funds.
6. Each Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of each Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class C shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. Each Fund will pay or cause to be paid expenses (including counsel fees and
disbursements) of any registration of its Class C shares of beneficial interest
under, but not limited to, Federal, state or other regulatory authority, fees of
filing periodic reports with regulatory bodies and of preparing, setting in type
and printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class C shares of each Fund, for fees and
expenses incident to the issuance of Class C shares of beneficial interest, such
as the cost of stock certificates (if offered), issuance taxes, fees of the
transfer agent, including the cost of preparing and mailing notices to
shareholders pertaining to transactions with respect to shareholders' accounts,
dividend disbursing agent's costs, including the cost for preparing and mailing
notices confirming shares acquired by shareholders pursuant to the reinvestment
of dividends and distributions, and the mailing to shareholders of prospectuses,
and notices and reports as may be required from time to time by regulatory
bodies or for such other purposes, except for purposes of sales by the
Underwriter as outlined in paragraph 8 hereof.
8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Funds and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class C shares of each Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
C shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or
<PAGE>
other communication to shareholders, to the extent that such expenses are
necessarily incurred to effect compliance by each Fund with any Federal or state
law or other regulatory bodies); and (c) expenses of advertising in connection
with such offering; provided, however, that the Underwriter shall not be
required to pay for any such expenses to the extent that they are paid pursuant
to a Fund's distribution plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940.
9. Each Fund agrees to register, from time to time as necessary, additional
Class C shares with the Securities & Exchange Commission, State and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or that their may be no omission to state a material fact therein
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As used in this Agreement, the term
" Registration Statement" shall mean the Registration Statement
most recently filed by the Trust with the Securities & Exchange Commission and
effective under the Securities Act of 1933, as amended, as such Registration
Statement is amended from time to time, and the term "Prospectus" shall mean the
most recent form of prospectus authorized by the Trust for use by the
Underwriter and by dealers.
10. This Agreement may be terminated at any time on not more than 60 days
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the class of outstanding voting securities of each respective Fund
or by vote of a majority of the Trustees, acting separately on behalf of each
Fund, who are not "interested persons" of the Funds and who have not direct or
indirect financial interest in the operation of the Plan or in any agreements.
11. This Agreement shall terminate automatically in the event of its assignment.
The term "assignment" for this purpose shall have the meaning defined in Section
2(a) (4) of the Investment Company Act of 1940.
12. This Agreement has been approved by the Trustees of the Trust on behalf of
the Funds and shall continue in effect for two years from its effective date.
Thereafter, this Agreement shall continue for successive annual periods,
provided that such continuance is specifically approved annually by a majority
of the Trustees who are not interested persons of the parties hereto as defined
in the Investment Company Act of 1940 and either (a) by vote of the Trustees of
the Trust or (b) by vote of a majority or the outstanding voting securities of
each Fund, as defined in the Investment Company Act of 1940.
13. The Declaration of Trust, establishing the Trust, dated August 18, 1993, a
copy of which together with all amendments thereto (the "Declaration") is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name of the Trust refers to the Trustees under the Declaration
collectively as trustees, but not individually or personally; and no Trustee,
shareholder officer, employee or agent of the Trust and/or the
<PAGE>
Funds may be held to any personal liability, nor may resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with affairs of the Trust, but the Trust property only shall be
liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized and to become effective as of the
day and year set forth above.
Attest: NORTHSTAR TRUST
By: ________________________ By: _____________________________
Attest: NORTHSTAR DISTRIBUTORS, INC.
By: ________________________ By: _____________________________
EXHIBIT 9
NORTHSTAR TRUST
ADMINISTRATIVE SERVICES AGREEMENT
AS AMENDED NOVEMBER 8, 1997
Agreement made this 8th day of November, 1993, and amended and restated
on this 8th day of November, 1997, between Northstar Trust (the "Trust") on
behalf of Northstar Income and Growth Fund, Northstar High Total Return Fund,
Northstar Growth + Value Fund, Northstar High Total Return Fund II, Northstar
International Value Fund and Northstar Emerging Markets Value Fund (each a
"Fund," collectively the "Funds"), and Northstar Administrators Corporation (the
"Administrator").
WHEREAS, the Trust is a Massachusetts business trust authorized to
issue shares in series and is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Funds are series of the Trust; and
WHEREAS, Northstar Investment Management Corporation (the "Adviser")
serves as investment adviser to the Funds, and the Trust wishes to retain the
Administrator to render administrative and other services to the Funds, and the
Administrator is willing to render such services to the Funds;
I. in consideration of the premises, promises and mutual covenants herein
contained, it is agreed between the parties as follows:
1. APPOINTMENT
The Trust hereby appoints the Administrator to serve as administrator
to the Funds for the periods and on the terms set forth herein. The
Administrator accepts this appointment and agrees to furnish the
services set forth herein for the compensation provided herein.
2. SERVICES AS ADMINISTRATOR
A. GENERAL SERVICES
Subject to the supervision and direction of the Board of
Trustees of the Trust, the Administrator will (a) assist in
supervising all aspects of the Funds' operations except those
performed by the Funds' Adviser under its investment advisory
agreement; (b) furnish such statistical or other factual
information, advice regarding economic factors and trends and
advice and guidelines as to transactions in specific
securities (but without generally furnishing advice or making
recommendations regarding the purchase or sale of securities);
(c) maintain or supervise, as the case may be, the maintenance
by the Adviser or third parties approved by the Trust of such
books and records of the Funds as may be required by
applicable federal or state law; (d) perform all corporate
secretarial functions on behalf of the Funds; (e) provide the
Funds with office
<PAGE>
facilities, assemble and provide statistical and research
data, provide data processing, clerical, internal legal,
internal executive, administrative and bookkeeping services,
and provide stationary and office supplies; (f) supervise the
performance by third parties of Fund accounting and portfolio
pricing services, internal audits and audits by independent
accountants for the Funds; (g) prepare and arrange for the
printing, filing and distribution of prospectuses, proxy
materials, and periodic reports to the shareholders of the
Funds as required by applicable law; (h) prepare or supervise
the preparation by third parties approved by the Trust of all
federal, state, and local tax returns and reports of the Funds
required by applicable law; (i) prepare, update, and arrange
the filing of the Funds' registration statement and amendments
thereto and other documents as the Securities and Exchange
Commission (the "Commission") and other federal regulatory
authorities may require by applicable law, and oversee
compliance under all state regulatory requirements to which
the Funds are subject; (j) render to the Board of Trustees of
the Trust such periodic and special reports respecting the
Funds as the Board may reasonably request; (k) arrange,
assemble information and reports for, and attend meetings of
the Trustees and the shareholders of the Funds; (l) maintain a
fidelity bond as required under the 1940 Act for the Trust and
liability insurance for the Trustees and officers of the
Trust; and (m) make available its officers and employees to
the Board of Trustees and officers of the Trust for
consultation and discussions regarding the administration of
the Funds.
B. SHAREHOLDER SERVICING
Subject to the supervision and direction of the Board of
Trustees, the Administrator will (a) provide customer service
to all shareholder accounts, including responding to all
telephone inquiries and written correspondence; and (b)
maintain records of all broker-dealers holding shareholder
accounts in the Funds; and (c) assist broker-dealers in
servicing shareholder accounts, including processing broker
wire orders for purchases of shares of the Funds.
C. PERFORMANCE OF DUTIES
The Administrator, at its discretion, may enter into contracts
with third parties for the performance of the services to be
provided by the Administrator under this Agreement.
The Administrator, in the performance of its duties and
obligations under this Agreement, shall act in conformity wit
the Registration Statement, as amended, of the Funds and with
the instructions and directions of the Board of Trustees of
the Trust and will conform to, and comply with, the
requirements of the 1940 Act and all other applicable federal
and state laws and regulations. In performing its shareholder
servicing duties listed in subparagraph B herein, the
Administrator shall not engage in any activities that would
require it to register as a transfer agent under the
Securities Exchange Act of 1934.
<PAGE>
3. DOCUMENTS
The Trust has delivered to the Administrator copies of each of
the following documents and will deliver to it all future
amendments and supplements, if any:
(a) Declaration of Trust, as amended, as filed
with the Secretary of the Commonwealth of
Massachusetts;
(b) By-laws of the Trust;
(c) Certified resolutions of the Trustees
authorizing the appointment of the
Administrator and approving this Agreement
on behalf of the Trust and each Fund;
(d) Registration Statement on Form N-1A under
the 1940 Act and the Securities Act of 1933,
as amended from time to time (the
"Registration Statement"), as filed with the
Commission, relating to the Trust and shares
of beneficial interest of each Fund and all
amendments thereto.;
(e) Notification of Registration of the Trust
under the 1940 Act on Form N-8A as filed
with the Commission and all amendments
thereto;
(f) Prospectus and Statement of Additional
Information included in the Registration
Statement, as amended from time to time. All
references to this Agreement, the Prospectus
and Statement of Additional Information
shall be to such documents as most recently
amended or supplemented and in effect.
4. DIRECTORS, OFFICERS AND EMPLOYEES
The Administrator shall authorize and permit any of its directors, officers and
employees who may be elected as trustees or officers of the Trust and/or the
Funds to serve in the capacities in which they are elected. All services to be
furnished by the Administrator under this Agreement may be furnished through
such directors, officers or employees of the Administrator.
5. RECORDS
The Administrator agrees that all records which it maintains for the Trust
and/or the Funds are property of the Trust and/or the Funds. The Administrator
will surrender promptly to
<PAGE>
the Trust and/or the Funds any such records upon either the Trust's or the
Fund's request. The Administrator further agrees to preserve such records for
the periods prescribed in Rule 31a-2 of the Commission under the 1940 Act.
6. COMPENSATION
In consideration of the services rendered pursuant to Section 2.A. of this
Agreement, the Funds will pay the Administrator a fee, computed and accrued
daily and payable monthly, at an annual rate of 0.10% of each Fund's average
daily net assets. For the purpose of determining fees payable to the
Administrator, the value of a Fund's average daily net assets shall be computed
at the times and in the manner specified in the Prospectus and Statement of
Additional Information of the Fund as from time to time in effect.
In consideration of the services rendered pursuant to Section 2.B. of this
Agreement, the Administrator shall receive a fee of $5.00 per year per account
of each beneficial holder of shares in a Fund, which shall be payable no later
than January 31 of the following year.
7. EXPENSES
The Administrator will bear all expenses in connection with the performance of
its services under this Agreement, except that the Administrator will be
reimbursed by the Funds for the out-of-pocket costs incurred in connection with
this Agreement or by third parties who are performing services as permitted by
paragraph 2. The Funds will bear certain other expenses to be incurred in their
operation, including: taxes, interest, brokerage fees and commissions, if any;
charges of custodians and transfer and dividend disbursing agents; certain
insurance premiums; outside auditing and legal expenses; cost of maintenance of
the Funds' existence; cost attributable to investor services, including without
limitation, telephone and personnel expenses; charges of accounting, internal
auditing, and pricing of portfolio securities for the Funds, including the
charges of an independent pricing service; costs of preparing and printing
prospectuses and statement of additional information for regulatory purposes and
for distribution to existing shareholders; costs of shareholders' reports and
meeting of the shareholders of the Funds and of the officers or the Board of
Trustees of the Trust; and any extraordinary expenses.
8. STANDARD OF CARE
The Administrator shall exercise its best judgment in rendering the services
under this Agreement. The Administrator shall not be liable for any error or
judgment or mistake of law or for any loss suffered by the Funds or the Funds'
shareholders in connection with the matter to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Administrator against liability to the Funds or to their shareholders to
which the Administrator would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Administrator's reckless disregard of its obligations
and duties under this
<PAGE>
Agreement. As used in this Section 8, the term "Administrator" shall include any
officers, directors, employees, or other affiliates of the Administrator
performing services with respect to the Funds.
9. DURATION AND TERMINATION
This Agreement shall continue in effect unless sooner terminated as provided
herein, for two years from the date hereof and shall continue from year to year
thereafter, provided each continuance is specifically approved at least annually
by a majority of the Board of Trustees of the Trust, including a majority of the
Board of Trustees who are not "interested persons" (as defined in the 1940 Act)
of any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting such approval. This Agreement is terminable, without
penalty, on 60 days' written notice by the Board of Trustees of the Trust or by
vote of holders of a majority of the Funds' shares, or upon 90 days' written
notice by the Administrator.
10. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The administrative services of the Administrator to the Funds under this
Agreement are not to be deemed exclusive, and the Administrator, or any
affiliate thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objective and
policies are similar to those of the Funds) and to engage in other activities,
so long as its services hereunder are not impaired thereby.
11. ASSIGNMENT
This Agreement may be assigned by either party only upon the prior written
consent of the other party.
12. MISCELLANEOUS
(a) This Agreement constitutes the full and complete agreement of
the parties hereto with respect to the subject matter hereof.
(b) Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference,
and in no way defined, limit extend or describe the scope of
this Agreement or the intent of any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of
which together shall for all purposes constitute one
Agreement, binding on all parties.
<PAGE>
(d) This Agreement and the rights and obligations of the parties
hereunder shall be governed by, and interpreted, construed and
enforced in accordance with the laws of the State of
Connecticut.
(e) If any provisions of this Agreement or the application thereof
to any party or circumstances shall be determined by any court
of competent jurisdiction to be valid or unenforceable to any
extent, the remainder of this Agreement or the application of
such provision to such person or circumstance, other than
those as to which it is so determined to be invalid or
unenforceable, shall not be affected thereby, and each
provision hereof shall be valid and shall be enforced to the
fullest extent permitted by law.
(f) Notices of any kind to be given to the Administrator by the
Trust shall be in writing and shall duly given if mailed or
delivered to the Administrator at Two Pickwick Plaza,
Greenwich, Connecticut 06830, or at such other address or to
such individual as shall be specified by the Administrator to
the Trust.
(g) The Administrator, the Trust and the Funds each agree that the
name "Northstar" is proprietary to, and a property right of,
the Administrator. The Trust and the Funds agree and consent
that (i) each will only use the name "Northstar" as part of
its name and for no other purpose, (ii) each will not purport
to grant any third party the right to use the name "Northstar"
and (iii) upon the termination of this Agreement, the Trust
and the Funds shall, upon the request of the Administrator,
cease to use the name "Northstar," and shall use its best
efforts to cause its officers, trustees and shareholders to
take any and all actions which the Administrator may request
to effect the foregoing.
(h) The Declaration of Trust, establishing the Trust, dated August
18, 1993, a copy of which, together with all amendments
thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that
the name "Northstar Trust" refers to the Trustees under the
Declaration collectively as trustees, but not individually or
personally; and no Trustee, shareholder, officer, employee or
agent of the Trust and/or the Funds may be held to any
personal liability, nor may resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Trust, but the
Trust property only shall be liable.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year set forth
above.
Attest: NORTHSTAR TRUST
By:_________________________________ By:_________________________________
Attest: NORTHSTAR ADMINISTRATORS
CORPORATION
By:_________________________________ By:_________________________________
EXHIBIT 10
OPINION OF COUNSEL
[LETTERHEAD OF DECHERT PRICE & RHOADS]
December 29, 1997
The Northstar Trust
Two Pickwick Plaza
Greenwich, CT 06830
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 of an
indefinite number of shares of beneficial interest (the "Shares") the Northstar
Emerging Markets Fund (the "Fund"), which is a series of the Northstar Trust
(the "Trust"), we have examined such matters as we have deemed necessary, and we
are of the opinion that, as permitted by its Declaration of Trust, and assuming
that the Trust or its agent receives consideration for the Shares in accordance
with the provisions of its Declaration of Trust, the Shares will be legally and
validly issued, will be fully paid, and will be non-assessable by the Trust.
We hereby consent to the use of this opinion as an exhibit to
Post-Effective Amendment No. 33 to the Trust's Registration Statement on
Form N-1A filed with the Securities and Exchange Commission (File No. 33-67852),
and to the use of our name in the prospectus and statement of additional
information contained in the Registration Statement or incorporated therein by
reference, and any amendments thereto.
Sincerely,
(Signature of Dechert Price & Rhoads)
<PAGE>
EXHIBIT 15
NORTHSTAR TRUST
DISTRIBUTION AND SERVICE PLAN
AS AMENDED NOVEMBER 8, 1997
Distribution Plan (the "Plan") made this 3rd day of November, 1993, and amended
and restated on this 8th day of November, 1997, for Northstar Trust (the
"Trust") consisting of the series named on Schedule 1 hereto, as such schedule
may be revised from time to time (each, a "Fund").
1. In connection with the sale and promotion of the shares of each Fund and the
furnishing of services to the shareholders of each Fund, each Fund shall pay
Northstar Distributors, Inc. (the "Distributor"), or any successor authorized to
act as underwriter, in respect of each class set forth on Schedule 1 (each, a
"Class"), at the end of each month, an annual fee not to exceed the amount set
forth in Schedule 1. With respect to each Class, such expenditures may consist
of: (i) commissions to sales personnel for selling the applicable Class of
shares of the Funds; (ii) compensation, sales incentives and payments to sales,
marketing and service personnel relating to the applicable Class; (iii) payments
to broker-dealers and other financial institutions which have entered into
agreements with the Distributor in the form of the Dealer Agreement for
Northstar Affiliated Investment Companies for services rendered in connection
with the sale and distribution of the applicable Class of shares; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the applicable Class of shares; (v) the costs of
preparing and distributing promotional materials relating to the applicable
Class of shares; (vi) the cost of printing the Trust's Prospectus and Statement
of Additional Information for distribution to potential investors; and (vii)
such other similar services that the Trustees determine are reasonably
calculated to result in the sale of the applicable Class of shares; provided,
however, a portion of such amount paid to the Distributor, which portion shall
be equal to or less than 0.25% annually of the average daily net assets of the
Fund shares may be paid for reimbursing the costs of providing services to the
shareholder, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee").
Amounts paid or payable by each Fund under this Plan or any agreement with any
person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's-length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees, in the exercise of reasonable business
judgment, in light of their fiduciary duties under state law and Sections 36(a)
and (b) of the Investment Company Act of 1940, as amended (the "Act") and based
upon appropriate business estimates and projections.
2. At least quarterly in each year that this Plan remains in effect, each Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by each Fund, shall prepare and
furnish to the Trustees for their review, and the Trustees shall review, a
written report complying with the requirements of Rule 12b-1 under the Act
<PAGE>
regarding the amounts expended by each Fund under the Plan and the purposes for
which such expenditures were made.
3. This Plan shall not take effect until it, together with any related
agreements, have been approved (a) by a vote of at least the majority of the
Trustees, acting separately on behalf of each Fund, as well as a vote of at
least a majority of the Trustees, acting separately on behalf of each Fund, who
are not interested persons (as defined in the Act) of each Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
related agreements (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on the Plan or any related agreements, and if
required under the 1940 Act (b) by a vote of at least a majority (as defined in
the Act) of the outstanding Class A shares of each Fund.
4. This Plan shall remain in effect for one year from the date of its execution
and may be continued thereafter if specifically approved at least annually by
vote of at least a majority of the Trustees, acting separately on behalf of each
Fund, as well as a majority of the Disinterested Trustees. As to each Class,
this Plan may be amended at any time, provided that (a) the Plan may not be
amended to increase materially the amount of the distribution fees or Service
Fees payable hereunder pursuant to in Paragraph 1 hereof without the approval of
at least a majority (as defined in the Act) of the outstanding shares of the
applicable Class and (b) all material amendments to this Plan must be approved
by a vote of the Trustees, acting separately on behalf of each Fund, and of the
Disinterested Trustees.
5. While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) shall be committed to the
discretion of the Disinterested Trustees then in office.
6. With respect to each Class, any related agreements shall be in writing and
each shall provide that (a) such agreement shall be subject to termination,
without penalty, by vote of a majority (as defined in the Act) of the
outstanding voting shares of the applicable Class on not more than 60' days'
written notice to any other party to the agreement; and (b) such agreement shall
terminate automatically in the event of its assignment.
7. With respect to each Class, this Plan may be terminated at any time by a vote
of a majority of the Disinterested Trustees, acting separately on behalf of each
respective Fund, or by vote of a majority (as defined in the Act) of the
outstanding voting shares of the applicable Class of each Fund. In the event
this Plan is terminated or otherwise discontinued with respect to a Fund, the
Fund no longer will be obligated to reimburse the Distributor for distribution
related expenses incurred under the Plan, unless payment by the Fund of all or
any of such unreimbursed expenses shall be specifically approved by the
Trustees, including a majority of the Disinterested Trustees, of the Funds.
8. The Funds shall preserve copies of this Plan and any related agreements and
all reports made pursuant to paragraph 2 hereof, and any information, estimates,
projections and other materials that serve as a basis therefor, considered by
the Trustees, for a period of not less than six years from the
<PAGE>
date of this Plan, or the agreements or reports, as the case may be, the first
two years in an easily accessible place.
9. The Declaration of Trust, establishing the Trust, dated August 18, 1993, a
copy of which together with all amendments thereto (the "Declaration") is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Northstar Trust" refers to the Trustees under the
Declaration collectively as trustees, but not individually or personally; and no
Trustee, shareholder, officer, employee or agent of the Trust and/or the Funds
may be held to any personal liability, nor may resort be had to their private
property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust, but the Trust property only shall be
liable.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its officers
designated below as of the day and year set forth above.
Attest: NORTHSTAR TRUST
By:_________________________________ By:_________________________________
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
NAME OF FUND MAXIMUM CLASS A FEE MAXIMUM CLASS B FEE MAXIMUM CLASS C FEE
- ------------------------------ ---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C>
Northstar High Total Return 0.30 of 1% 1.00% 1.00%
Fund
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Northstar Income and Growth 0.30 of 1% 1.00% 1.00%
Fund
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Northstar Growth + Value Fund 0.30 of 1% 1.00% 1.00%
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Northstar High Total Return 0.30 of 1% 1.00% 1.00%
Fund II
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Northstar International 0.30 of 1% 1.00% 1.00%
Value Fund
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Northstar Emerging Markets Value 0.30 of 1% 1.00% 1.00%
Fund
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
<PAGE>
C O M P O S I T E
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
FOR
THE NORTHSTAR FUNDS
AND
NORTHSTAR TRUST
I. INTRODUCTION
The Northstar Funds and the Northstar Trust hereby adopt this Multiple
Class Plan (the "Plan") pursuant to Rule 18f-3 under the Investment
Company Act of 1940 (the "1940 Act") on behalf of the current series of
The Northstar Funds: Northstar Special Fund, Northstar Growth Fund,
Northstar Balance Sheet Opportunities Fund, Northstar Government
Securities Fund, Northstar Strategic Income Fund, and Northstar High
Yield Fund; the current series of the Northstar Trust: Northstar Income
and Growth Fund, Northstar High Total Return Fund, Northstar Growth +
Value Fund, Northstar High Total Return Fund II, Northstar
International Value Fund and Northstar Emerging Markets Value Fund; and
any series that may be established in the future (referred to herein
collectively as the "Funds" and individually as a "Fund").
II. MULTIPLE CLASS STRUCTURE
Each of the Funds continuously offers three classes of shares: "Class A
Shares," "Class B Shares" and "Class C Shares." The Northstar Growth
Fund also offers a fourth class of shares designated "Class I Shares."
In addition, prior to June 5, 1995, the Northstar Special Fund,
Northstar Growth Fund, Northstar Balance Sheet Opportunities Fund,
Northstar Government Securities Fund, Northstar Strategic Income Fund
and Northstar High Yield Fund each offered only one class of shares,
which is currently designated as "Class T shares." Class T shares are
no longer offered for sale by the Funds, except in connection with
reinvestment of dividends and other distributions, upon exchanges of
Class T shares of another Fund, and upon exchange of shares from the
Class T Account of The Cash Management Fund of Salomon Brothers
Investment Series (the "Money Market Portfolio").
Shares of each class of a Fund shall represent an equal pro rata
interest in such Fund and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions,
except that: (a) each class shall have a different designation; (b)
each class shall bear any Class Expenses, as defined in Section C
below; and (c) each class shall have exclusive voting rights on any
matter submitted to shareholders that relates solely to its
distribution arrangement and each class shall have separate voting
rights on any matter submitted to
<PAGE>
shareholders in which the interests of one class differ from the
interests of any other class. In addition, Class A, Class B, Class C,
Class I and Class T shares shall have the features described below.
A. Sales Charge Structure
(1) Class A Shares. Class A shares of a Fund shall be
offered at net asset value plus an initial sales
charge. The front-end sales charge shall be in such
amount as is disclosed in the Funds' prospectus or
supplements thereto and shall be subject to
reductions for larger purchases and such waivers or
reductions as are disclosed in the Funds' prospectus
or supplements thereto. Class A shares generally
shall not be subject to a contingent deferred sales
charge; however, a contingent deferred sales charge
in such amount as may be described in the Funds'
prospectus or supplements thereto may be imposed on
redemptions of Class A shares acquired in a purchase
of over a million dollars that are redeemed within 18
months of their purchase. Additional contingent
deferred sales charges may be imposed in such other
cases as the Board may approve and as are disclosed
in the Funds' prospectus or supplements thereto.
(2) Class B Shares. Class B shares of a Fund shall be
offered at net asset value without the imposition of
an initial sales charge. A contingent deferred sales
charge in such amount as is described in the Funds'
prospectus or supplements thereto shall be imposed on
Class B shares, subject to such waivers or reductions
as are disclosed in the Funds' prospectus or
supplements thereto.
(3) Class C Shares. Class C shares of a Fund shall be
offered at net asset value without the imposition of
a sales charge at the time of purchase. A contingent
deferred sales charge in such amount as is described
in the Funds' prospectus or supplements thereto shall
be imposed on redemptions of Class C shares made
within one year from the first day of the month after
purchase, subject to waivers or reductions as are
disclosed in the Funds' prospectus or supplements
thereto.
(4) Class I Shares. Class I shares are offered to
certain institutional investors without the
- 2 -
<PAGE>
imposition of an initial sales charge or a
contingent deferred sales charge.
(5) Class T Shares. Class T shares are no longer offered
for sale by the Funds but may be obtained pursuant to
the methods described above. A contingent deferred
sales charge in such amount as is described in the
Funds' prospectus or supplements thereto shall be
imposed on redemptions of Class T shares made within
four years after their purchase, subject to waivers
or reductions as are disclosed in the Funds'
prospectus or supplements thereto.
B. Service and Distribution Plans
Each Fund has adopted a 12b-1 plan for each class of shares of
that Fund (other than Class I Shares of the Northstar Growth
Fund) with the following terms:
(1) Class A Shares. Class A shares of each Fund, shall
pay Northstar Distributors, Inc. (the "Underwriter")
0.25% annually of the average daily net assets of
each Fund's Class A shares for service activities, as
defined in the rules of the National Association of
Securities Dealers, and 0.05% annually of the average
daily net assets of each Fund's Class A shares for
distribution activities.
(2) Class B Shares. Class B shares of each Fund, shall
pay the Underwriter 0.25% annually of the average
daily net assets of each Fund's Class B shares for
service activities, as defined in the rules of the
National Association of Securities Dealers, and 0.75%
annually of the average daily net assets of each
Fund's Class B shares for distribution activities.
(3) Class C Shares. Class C shares of each Fund shall pay
the Underwriter 0.25% annually of the average daily
net assets of each Fund's Class C shares for service
activities, as defined in the rules of the National
Association of Securities Dealers, and 0.75% annually
of the average daily net assets of each Fund's Class
C shares for distribution activities.
(4) Class T Shares. Class T shares of the Northstar
Growth Fund, Northstar Special Fund and Northstar
- 3 -
<PAGE>
Strategic Income Fund shall pay the Underwriter 0.95%
annually of the average daily net assets of those
Funds' Class T shares; Class T shares of the
Northstar Balance Sheet Fund shall pay the
Underwriter 0.75% annually of the average daily net
assets of that Fund's Class T shares; and the
Northstar Government Securities Fund and Northstar
High Yield Fund shall pay 0.65% of the average daily
net assets of those Funds' Class T shares. In each
case, 0.25% of the average daily net assets of each
Fund's Class T shares, which is paid annually to the
Underwriter pursuant to the 12b-1 plans, shall be
allocated to pay for service activities, as defined
in the rules of the National Association of
Securities Dealers, with the remainder allocated
toward payment for distribution activities.
C. Allocation of Income and Expenses
(1) The gross income of each Fund shall, generally, be
allocated to each class on the basis of net assets.
To the extent practicable, certain expenses (other
than Class Expenses as defined below which shall be
allocated more specifically) shall be subtracted from
the gross income on the basis of the net assets of
each class of each Fund. These expenses include:
(a) Expenses incurred by each Trust (for
example, fees of Trustees, auditors and
legal counsel) not attributable to a
particular Fund or to a particular class of
shares of a Fund ("Trust Expenses"); and
(b) Expenses incurred by a Fund not attributable
to any particular class of the Fund's shares
(for example, advisory fees, custodial fees,
or other expenses relating to the management
of the Fund's assets) ("Fund Expenses").
(2) Expenses attributable to a particular class ("Class
Expenses") shall be limited to: (i) payments made
pursuant to a 12b-1 plan; (ii) transfer agency fees
and expenses, including any expenses of
broker-dealers and other third parties providing
shareholder services to shareholders of a specific
class; (iii) printing and postage expenses related to
preparing and distributing materials such as
shareholder reports,
- 4 -
<PAGE>
prospectuses and proxies to current shareholders of a
specific class; (iv) Blue Sky registration fees
incurred by a class; (v) SEC registration fees
incurred by a class; (vi) the expense of
administrative personnel and services to support the
shareholders of a specific class; (vii) litigation or
other legal expenses relating solely to one class;
and (viii) Trustees' fees incurred as a result of
issues relating to one class. Expenses in category
(i) and (ii) above must be allocated to the class for
which such expenses are incurred. All other "Class
Expenses" listed in categories (iii)-(viii) above may
be allocated to a class but only if the President and
Treasurer have determined, subject to Board approval
or ratification, which of such categories of expenses
will be treated as Class Expenses, consistent with
applicable legal principles under the Act and the
Internal Revenue Code of 1986, as amended.
Therefore, expenses of a Fund shall be apportioned to
each class of shares depending on the nature of the
expense item. Trust Expenses and Fund Expenses will
be allocated among the classes of shares based on
their relative net asset values. Approved Class
Expenses shall be allocated to the particular class
to which they are attributable.
In the event a particular expense is no longer
reasonably allocable by class or to a particular
class, it shall be treated as a Trust Expense or Fund
Expense, and in the event a Trust Expense or Fund
Expense becomes allocable at a different level,
including as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and
to approval or ratification by the Board of Trustees.
The initial determination of expenses that will be
allocated as Class Expenses and any subsequent
changes thereto shall be reviewed by the Board of
Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons," as
defined in the 1940 Act.
D. Exchange Privileges. Shareholders may exchange shares
of a Fund for the same class of shares of another Fund
or for shares of the Money Market Portfolio except that
Class I Shares of the Growth Fund do not provide for
any exchange privileges.
- 5 -
<PAGE>
Shareholders of a class who exchange shares of a Fund for
shares of the Money Market Portfolio may only exchange shares
of the Money Market Portfolio for shares of another Fund in
the same class as the shareholder originally held. Exchanges
are effected at net asset value per share next computed
following receipt of a properly executed exchange request,
without a sales charge, provided, however, that in the case of
a exchanges into Class A shares of a Fund after a direct
purchase into the Money Market Portfolio, the applicable sales
charge shall be imposed. Collection of the contingent deferred
sales charge shall be deferred on shares subject to a charge
that are exchanged for shares of the same class of another
Fund, or converted to shares of the Money Market Portfolio.
Under these circumstances, the combined holding period of
shares in each Fund or in a Fund and the Money Market
Portfolio, shall be used to calculate the conversion period
discussed below, if applicable, and to determine the deferred
sales charge due upon redemption. Each Fund reserves the right
to terminate or modify its exchange privileges at any time.
E. Conversion Features. Class B and Class T shares
automatically convert to Class A shares after eight
years from purchase in the case of Class B shares, and
on the later of May 31, 1998 or eight years after
purchase in the case of Class T shares.
For purposes of conversion to Class A shares, shares purchased
through the reinvestment of dividends and distributions paid
in respect of Class B or Class T shares in a shareholder's
Fund account will be considered to be held in a separate
subaccount. Each time any Class B or Class T shares in the
shareholder's Fund account (other than those in the
subaccount) convert to Class A, an equal pro rata portion of
the Class B or Class T shares in the subaccount will also
convert to Class A.
Shares shall be converted at the relative net asset values of
the two classes without the imposition of a sales charge, fee
or other charge. If the amount of Class A 12b-1 expenses of
any Fund is increased materially without the approval of the
Class B and Class T shareholders, any conversion will only
take place in a manner permitted by Rule 18f-3.
F. Waiver or Reimbursement of Expenses. Expenses may be
waived or reimbursed by any adviser, by the Underwriter
- 6 -
<PAGE>
or any other provider of services to the Funds without
the prior approval of the Board of Trustees.
III. BOARD REVIEW
A. Initial Approval
The Board of Trustees, including a majority of the Trustees
who are not "interested persons" of the Funds and the Trusts
as defined in the 1940 Act, at a meeting held October 29,
1996, initially approved the Plan based on a determination
that the Plan, including the expense allocation, is in the
best interests of each class and Fund individually and of the
Trusts. Their determination was based on their review of
information furnished to them which they deemed reasonably
necessary and sufficient to evaluate the Plan.
B. Approval of Amendments
The Plan may not be amended materially unless the Board of
Trustees, including a majority of the Trustees who are not
"interested persons" of the Funds and the Trusts as defined in
the 1940 Act, have found that the proposed amendment,
including any proposed related expense allocation, is in the
best interests of each class and Fund individually and of the
Trusts. Such finding shall be based on information requested
by the Board and furnished to them which the Board deems
reasonably necessary to evaluate the proposed amendment.
C. Periodic Review
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant
to such schedule, as they may determine consistent with
applicable legal requirements.
IV. MISCELLANEOUS
A. Limitation of Liability
The Board of Trustees and the shareholders of each Fund shall
not be liable for any obligations of the Trusts or any Fund
under this Plan, and the Underwriter or any other person, in
asserting any rights or claims under this Plan, shall look
only to the assets and property
- 7 -
<PAGE>
of the Trusts or such Funds in settlement of such right or
claim, and not to such Trustees or shareholders.
IN WITNESS WHEREOF, the Trusts, on behalf of the Funds, have adopted
this Multiple Class Plan as of the 29 day of October, 1996, and amended and
restated on this 8th day of November, 1997, to be effective as of the day and
year set forth above.
THE NORTHSTAR FUNDS
NORTHSTAR TRUST
By: /s/ AGNES MULLADY
Title: Vice President and
Treasurer
- 8 -
<PAGE>
