As filed with the Securities and Exchange Commission on May 5, 1997
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. 20
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22
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:
<TABLE>
<CAPTION>
<S> <C>
__ immediately upon filing pursuant to paragraph (b) __ on (date) pursuant to paragraph (b)
X 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.
Registrant has registered an indefinite number of shares of beneficial interest
by its initial Registration Statement pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended, which became effective November 5,
1993. Registrant filed the notice required by Rule 24f-2 with respect to its
most recent fiscal year on December 23, 1996.
<PAGE>
CROSS REFERENCE SHEET
---------------------
The enclosed materials relate only to the Northstar International 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.
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
--------------------- ------------------
<S> <C>
1. Cover Page................................ Cover Page
2. Synopsis.................................. Expense Information
3. Condensed Financial
Information............................... Financial Highlights
4. General Description of
Registrant................................ Cover Page; Investment Objective and
Policies of the Fund; Other Investment
Techniques; Investment Considerations and
Risk Factors; General Information
5. Management of the Fund.................... Management of the Fund
6. Capital Stock and Other
Securities................................ How Net Asset Value is
Determined; How to Purchase Shares;
Alternative Sales Arrangements;
Investor Services and Account Policies;
Dividends, Distribution and Taxes;
General Information
7. Purchases of Securities Being
Offered................................... How Net Asset Value is Determined;
How to Purchase Shares; Alternative
Sales Arrangements; Investor Services and
Account Policies; Distribution Plans
8. Redemption or Repurchase.................. How Net Asset Value is Determined; How
to Sell Shares
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 Supervisor and
Other Services the Administrator; Other Information
17. Brokerage Allocation and Portfolio Transactions and Brokerage
Other Practices 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 Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND PROSPECTUS
JULY 4, 1997
This prospectus contains important information about investing in the Northstar
International Value Fund. Please read it 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.
What's inside
(bullseye graphic appears here) objective
(compass graphic appears here) investment
strategy
(safe graphic appears here) holdings
(balance scale graphic appears here) risks
(coin graphic appears here) what you pay
to invest
(currency graphic appears here) how the fund
has performed
These pages contain a
description of the fund, including its objective, investment strategy, types of
holdings, risks and portfolio managers.
You'll also find:
What you pay to invest. A list
of the fees and expenses you pay - both directly and indirectly - when you
invest in the fund.
How the fund has performed. A chart that shows the fund's
financial performance by share class.
Northstar International Value Fund 4
Meet the portfolio managers 6
Your guide to buying, selling and
exchanging shares of the Northstar International Value Fund 9
Mutual fund earnings and your taxes 16
The business of mutual funds 18
The risks of investing in mutual funds 20
Where to go for more information 24
(telephone graphic appears here)
If you have any questions about the Northstar
International Value Fund or about choosing suitable investments, please call us
at 1-800-595-7827.
3
<PAGE>
Northstar International Value Fund
Registrant
Northstar International Value Fund
Portfolio managers
Charles Brandes, Jeff Busby
Objective
(bulleye graphic appears here)
This fund's investment objective is long-term capital appreciation.
Investment
strategy
(compass graphic appears here)
The fund invests primarily in
foreign companies with a market capitalization of greater than
$1 billion, but it may hold up to 25% of its assets in companies with smaller
market capitalization.
The portfolio managers apply the technique of "value investing" by seeking
stocks that their research indicate 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
(safe graphic appears here)
The fund holds common stocks, preferred
stocks, American, European and Global depository receipts, 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 20. Under
normal circumstances, it will invest 65% of its total assets in securities of
companies located in at least three countries other than the U.S., located in
Western Europe, North and South America, Australia, Asia and other nations. Up
to 25% of its assets may be invested in securities of issuers located in
countries with emerging markets.
Risks
(balance scale graphic appears here)
Because it invests in equities, the fund is affected by changes in the stock
market. 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 20, The risks of investing in mutual funds.
What you pay
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
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none
Maximum deferred sales charge % none (1) 5.00 (2) 1.00 (2)
</TABLE>
Operating expenses paid each year by the fund
(as a % of average net assets)
Class A Class B Class C
Management fee(3) % 1.00 1.00 1.00
12b-1 fee(4) % 0.30 1.00 1.00
Other expenses % 0.50 0.50 0.50
Total fund
operating expenses
after reimbursement % 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 annual return of 5%,
and annual operating expenses remained at the current level. Keep in mind that
this is only an example -- actual expenses and performance may vary.
Year 1 Year 3 Year 5 Year 10
Class A
with redemptions $ 65 101 140 249
Class B
with redemptions $ 75 108 153 266 (5)
without redemptions $ 25 78 133 266 (5)
Class C
with redemptions $ 35 78 133 284
without redemptions $ 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 11 for details.
(2) This charge decreases over time. Please see page 11 for details.
(3) The adviser, subadviser and administrator have agreed to waive fees until
the net assets of the fund exceed $50 million.
(4) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10.
<PAGE>
How the fund has performed
(currency graphic appears here)
The following chart shows the fund's financial performance as a series of
Brandes Investment Trust,(1) by share class. The figures have been audited by
Ernst & Young, LLP, independent accountants.
Northstar International Value Fund
<TABLE>
<CAPTION>
Class A Class C
Year ended October 31, 1996 1995 (2) 1996 1995 (2)
<S> <C> <C> <C> <C>
Operating performance
Net asset value at the beginning of the period $ 13.26 12.50 13.22 12.50
Net investment income $ 0.23 0.15 0.09 0.10
Net realized and unrealized gain on investments $ 1.38 0.61 1.41 0.62
Total from investment operations $ 1.61 0.76 1.50 0.72
Dividends from net investment income $(0.06) -- (0.04) --
Dividends from net realized gain on investments
sold $ -- -- -- --
Total distributions $(0.06) -- (0.04) --
Net asset value at the end of the period $14.81 13.26 14.68 13.22
Total investment return (3) %12.15 9.39(4) 11.39 8.89(4)
Ratios and supplemental data
Net assets at the end of the period ($000s) $16,777 5,188 14,530 5,749
Ratio of expenses to average net assets % 1.85 1.85(4) 2.50 2.50(4)
Ratio of expense reimbursement to
average net assets % 0.97 6.08(4) 1.21 6.08(4)
Ratio of net investment income to
average net assets % 1.52 1.67(4) 0.62 1.13(4)
Average commissions per share $0.0314 -- 0.0314 --
Portfolio turnover rate % 74 -- 74 --
</TABLE>
(1) The 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.
(2) Share classes A & C commenced operations on March 6, 1995.
(3) Assumes dividends have been reinvested and does not reflect the effect of
sales charges.
(4) Annualized.
(telephone graphic appears here)
If you have any questions, please call 1-800-595-7827.
International Value Fund 5
<PAGE>
Meet the portfolio
managers
Portfolio
managers
Charles Brandes
Charles Brandes, who has over 29 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.
Jeff Busby
Jeff Busby, who has over 11 years of
investment management experience. At Brandes Investment Partners, L.P., he
serves as a Managing Partner and senior member of the investment committee. He
is also responsible for overseeing all trading activities for the firm.
Mr. Busby earned his BS in Chemical Engineering from Northwestern University and
his MBA in Finance from the University of Califoria, Berkeley. 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 Jeff Busby are co-portfolio managers of the fund. They
structure the portfolio from a buy list determined by their firm's investment
committee, of which they are senior members.
Sub-adviser
Brandes Investment Partners, L.P
A registered investment adviser, Brandes Investment Partners, L.P. is
sub-adviser for the fund. The company was formed in May 1996 as the successor to
its general partner, Brandes Investment Partners, Inc.
Brandes Investment Partners, L.P. currently manages over $10 billion in
international and global portfolios.
6
<PAGE>
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 audited or verified. They do not indicate how the
Northstar International Value Fund or Brandes Investment Partners, L.P. will
perform in the future.
The charts below illustrate the past performance of Brandes Investment Partners,
L.P. in managing accounts with investment objectives, policies and techniques
substantially similar, though not identical, to those of the Northstar
International Value Fund. The charts show average annual returns for a composite
of the actual performance of all international equity accounts managed by
Brandes Investment Partners from 1990 until the present, the average annual
return for the ten-year period from June 30, 1980 to June 30, 1990 for the
international (i.e., non-U.S.) equity portion of the global equity accounts
managed by Brandes Investment Partners, and average annual returns for the
Northstar International Value Fund. The 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 fund performance figures
reflect changes in share prices and reinvestment of dividends and
distributions, and are after deduction of all fund fees and expenses. The
accounts in the Brandes composites 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 are
performance figures of the Morgan Stanley Capital International (MSCI) EAFE
Index, an unmanaged index of securities listed on exchanges in markets in
Europe, Australia and the Far East. It has been adjusted to reflect reinvestment
of dividends. The results presented below may not equate with the return
experienced by any particular account or shareholder as a result of timing of
investments and redemptions and the effect of taxes on any client or
shareholder.
Brandes International MSCI
Equity Composite EAFE
(%)(a) Index (%)
One year, ended March 31, 1997 21.82 1.45
Three years, ended March 31, 1997 11.77 6.53
Five years, ended March 31, 1997 14.51 10.57
Ten years, ended June 30, 1990 (b) 24.24 18.98
Average annual return 16.53 5.36
since July 1, 1990
(graph appears here, plot points are below)
Brandes International Equity Composite MSCI EAFE Index
(Plot points for 6/30/80 to 6/30/90 to be added.)
1990 0.98 0.79
0.99 0.87
1.10 0.93
1991 1.13 0.88
1.26 0.96
1.38 0.98
1.43 0.86
1992 1.52 0.88
1.47 0.89
1.47 0.93
1.58 1.04
1993 1.65 1.14
1.82 1.22
2.07 1.23
2.01 1.27
1994 1.96 1.34
2.10 1.34
2.01 1.32
2.00 1.35
1995 2.12 1.36
2.20 1.41
2.28 1.47
1996 2.31 1.51
2.41 1.54
2.44 1.54
2.65 1.56
2.81 1.54
(a) the first annual returns presented (right) were calculated on a time-weighed
and asset-weighed, total return basis, including reinvestments of all dividends,
interest and income on a cash basis, realized and unrealized gain or losses are
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. The Brandes composite
results include all actual, fee-paying, fully discretionary international equity
accounts under management for at least one month beginning July 1, 1990, other
than wrap fee accounts and all actual, fee-paying, fully discretionary global
equity accounts for the period from June 30, 1980 to June 30, 1990, other than
wrap fee accounts. The weighed-average management fee during the period
from July 1, 1990 through December 31, 1996 was 0.96% per year. Securities
transactions are accounted for on the trade date and cash accounting is
utilized. Cash and equivalents are included in performance results. Starting
with calendar year 1992 through calendar year 1995, the net annual returns for
the Brandes composite have been examined by a Big Six accounting firm in
accordance with AIMR Level II verification standards. The examination of net
annual total returns for calendar year 1996 has not yet been completed. Copies
of their reports and a complete list and description of Brandes' composites are
available upon request.
(b) The performance results illustrated for the period June 30, 1980 through
June 30, 1990 were extracted from that of Brandes' Global Equity composite by
eliminating from the Global Equity performance results all results
attributable to U.S. investments. Consequently, these performance results
do not reflect the impact that actual economic and market factors might
have had on overall portfolio allocation determinations (as between the
various global markets) and overall stock selection criteria for accounts
managed in an international equity style.
If you have any questions, please call 1-800-595-7827.
7
<PAGE>
Meet the portfolio
managers
Performance
profile: Brandes Investment Partners, continued
Northstar MSCI
International EAFE
Value Fund (%) Index (%)
One year, ended March 31, 1997 21.88 1.45
Cumulative total return since March 6, 1995 37.86 17.46
(Graph appears below, point points are as follows)
Northstar International Value Fund MSCI EAFE Index
1995 1.00 1.00
1.03 1.04
1.04 1.02
1.04 1.00
1.08 1.07
1.07 1.03
1.07 1.05
1.04 1.02
1.07 1.05
1996 1.10 1.09
1.13 1.10
1.12 1.10
1.11 1.12
1.16 1.15
1.16 1.13
1.16 1.14
1997 1.12 1.10
1.14 1.11
1.17 1.13
1.17 1.13
1.25 1.17
1.27 1.16
1.31 1.11
1.31 1.13
1.35 1.14
8
<PAGE>
Your guide to buying,
selling and exchanging shares
of Northstar funds
There are three steps to take when you want to buy, sell or exchange shares of
our funds:
o first, choose a share class
o second, open a Northstar account and make your first investment
o third, choose one of several ways to buy, sell or exchange shares.
Choosing
a share class
The Northstar International 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 4.
Maximum Class A no limit Brokerage firms may have lower maximums.
amount you Class B $500,000 Please consult your financial adviser.
can buy Class C $750,000
Front end Class A yes, varies by size of investment
sales charge Class B none
Class C none
Deferred Class A only on investments of $1 million or more
sales charge if you sell within 18 months
Class B yes, if you sell within 5 years
Class C yes, if you sell within 1 year
Service fee Class A .25% per year
Class B .25% per year
Class C .25% per year
Distribution Class A .05% per year
fee Class B .75% per year
Class C .75% per year
Conversion Class B Class B shares convert to Class A after 8 years
(telephone graphic appears here)
If you have any
questions, please call 1-800-595-7827.
9
<PAGE>
Your guide to
buying, selling and exchanging shares
of Northstar funds
Front end sales charges
(Class A shares only)
<TABLE>
<CAPTION>
Your investment Front-end sales charge Amount retained by dealers
as a percentage as a percentage as a percentage
of your net investment of offering price of offering price
<S> <C> <C> <C>
up to $99,999 4.99 4.75 4.00
$100,000 to $249,999 3.90 3.75 3.10
$250,000 to $499,999 2.83 2.75 2.30
$500,000 to $999,999 2.04 2.00 1.70
$1,000,000 and over -- -- --
</TABLE>
Ways to reduce front-end sales charges
There are three ways you can reduce your sales charges.
1. Take advantage of purchases you've already made Rights of accumulation let
you combine the value of all the Class A shares you already own with your
current investment in other Northstar funds to calculate your sales charge.
2. Take advantage of purchases you intend to make By signing a non-binding
letter of intent, you can combine investments you plan to make over a 13
month period to calculate the sales charge you'll pay on each investment.
3. Buy as part of a group of investors You can combine your investments with
others in a recognized group when calculating your sales charge. The
following is a general list of the groups Northstar recognizes for this
benefit.
o you, your spouse and your children under the age of 21
o a trustee or fiduciary for a single trust, estate or fiduciary
account (including qualifying pension, profit sharing and other
employee benefit trusts)
o any other organized group that has been in existence for at least
six months, and wasn't formed solely for the purpose of investing at
a discount.
4. You may not have to pay front-end sales charges or a CDSC if you are:
o an active or retired trustee, director, officer, partner or employee
(including immediate family) of
- Northstar or any of its affiliated companies
- any Northstar affiliated investment company
- a dealer that has a sales agreement with the distributor
o a trustee or custodian of any qualified retirement plan or IRA
established for the benefit of anyone in the point above
o a dealer, broker or registered investment adviser who has entered
into an agreement with the distributor providing for the use of
shares of the fund in particular investment products such as "wrap
accounts" or other similar managed accounts for the benefits of
your clients
o a service provider for Northstar, any Northstar affiliated company,
or any Northstar affiliated investment company
o a Brandes employee, officer or partner.
You won't pay a sales charge when you buy Class A shares of the fund through a
dealer by transferring the proceeds of the sale of another open-end fund, so
long as:
o you have held the shares in the fund you're selling for at least six
months, and you paid a sales charge when you bought them
o you send the proceeds of the sale directly to Northstar or our agent
or hold them in cash or a money market fund
o you buy the shares of the fund within 60 days of the sale, and
o the fund has the same or a similar investment objective.
Pension, profit sharing and other benefit plans created pursuant to a plan
qualified under Section 401 of the Code or plans under Section 456 of the Code
don't pay a front-end sales charge or a CDSC, as long as the shares are
purchased by an employer sponsored plan with at least 50 eligible employees.
If you think you might be eligible to reduce your sales charges using any of
these methods, please call us or consult the Statement of Additional
Information.
10
<PAGE>
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 to $2,499,999 1.00%
$2,500,000 to $4,999,999 0.50%
$5,000,000 and over 0.25%
Class B & C shares
Years after you Class B Class C
bought the shares
1st year 5.00% 1.00%
2nd year 4.00% none
3rd year 3.00% none
4th year 2.00% none
5th year 2.00% none
after 5 years none none
When the CDSC might be waived
We may waive the CDSC for Class B and Class C shares if:
o the shareholder dies or becomes disabled
o you're selling your shares through our systematic withdrawal program
o you're selling shares of a retirement plan and you are over 70 1/2 years old
o you're exchanging Class B or C shares for the same class of shares of
another Northstar fund
o you fall into any of the categories listed in point 4 on page 10.
If you think you might be eligible for a CDSC waiver, please call us or consult
the Statement of Additional Information.
(telephone graphic appears here)
If you have any questions, please call 1-800-595-7827.
11
<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 is:
o $2,500 for non-retirement accounts
o $250 for retirement accounts
o $25 if you are investing using our automatic investment plan (see page 14).
Next, open an account in one of two ways:
o give a check to your broker, who will open an account for you, or
o complete the application enclosed with this prospectus and mail it to us,
along with your check, made payable to Northstar Funds.
Buying, selling and exchanging
Once you've opened an account and made your first investment, you can choose one
of three ways to buy, sell or exchange shares of Northstar funds: o through your
broker o directly, by mail or over the telephone o using one of our automatic
plans. We'll send you a confirmation statement every time you make a transaction
that affects your account balance, except when we pay distributions.
Instructions for each option appear in the chart on page 14, but here are a few
things you should know before you begin.
How shares are priced
The price you pay or receive when you buy, sell or exchange shares is determined
by the fund's net asset value (NAV) per share and share class. NAV is calculated
each business day at the close of regular trading on the New York Stock Exchange
(usually 4:00 Eastern Standard Time) by dividing the net assets of each fund
class by the number of shares outstanding. To calculate NAV, we determine the
fair market value of the fund's portfolio securities using the method described
in the Statement of Additional Information. When you're buying shares, you'll
pay the NAV that is next calculated after we receive your order in proper form,
plus any sales charges that apply. When you're selling shares, you'll receive
the NAV that is next calculated after we receive your order in proper form, less
any deferred sales charges that apply.
Some rules for buying
o The minimum amount of each investment after your first one is:
- $100 for non-retirement accounts
- $25 for retirement accounts
- $25 if you are investing using
our automatic investment plan
(see page 14).
o We record most shares on our books electronically. We will issue a
certificate if you ask us to in writing, however most of our shareholders
prefer not to have their shares in certificate form because certificated
shares can't be sold or exchanged by telephone or using the systematic
withdrawal program.
o We have the right to refuse a request to buy shares.
12
<PAGE>
Some rules for selling
o Selling your shares may result in a deferred sales charge. Please refer to
the table on page 11.
o We'll pay you within three days from the time we receive your request to
sell, unless you're selling shares you recently paid for by check. In that
case, we'll pay you when your check has cleared, which may take up to 15
days.
o If you are a corporation, partnership, executor, administrator, trustee,
custodian, guardian or you are selling shares of a retirement plan, you'll
need to complete special documentation and give us your request in writing.
Please call us for information.
o You can reinvest part or all of the proceeds of any shares you sell without
paying a sales charge. You must let us know in writing 30 days from the day
you sold the shares, and buy the same class of shares you sold. We will
reimburse you for any CDSC you paid. Please see page 16 for information
about how this can affect your taxes.
o You won't pay a service charge when you sell your shares, but your dealer
may charge you a fee.
o If selling shares results in the value of your account falling below $500,
we have the right to close your account, so long as your account has been
open for at least a year. We'll let you know 60 days in advance, and if you
don't bring the account balance above $500, we'll sell your shares, mail the
proceeds to you and close your account. We may also close your account if
you give us an incorrect social security number or taxpayer identification
number.
o In unusual circumstances, we may temporarily suspend the processing of
requests to sell.
Some rules for exchanging
o When you exchange shares, you are selling shares of one fund and using the
proceeds to buy shares of another fund. Please see page 16 for information
about how this can affect your taxes.
o Before you make an exchange, be sure to read the sections of the prospectus
that discuss the shares you're exchanging to.
o 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
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.
o For the purposes of calculating CDSC, shares you exchange will continue to
age from the day you first purchased them, even if you're exchanging into
The Cash Management Fund.
o We'll let you know 60 days in advance if we want to make any changes to
these rules.
(telephone graphic appears here)
If you have any questions, please call 1-800-595-7827.
13
<PAGE>
Your guide to
buying, selling and exchanging shares
of Northstar funds
Ways to buy, sell or exchange
When to use
this option
Through your dealer
o buy
o sell
o exchange
By mail
Please call us if you have any questions--we can't process your request until we
have all of the documents we need.
o buy
o sell
o exchange
By telephone
To sign up for this service, complete section 9 of the
application or call us at 1-800-595-7827.
o sell
o exchange
Automatic investment plan
To sign up for this service, complete section 7 of the
application or call us at 1-800-595-7827.
o buy
Systematic withdrawal program
To sign up for this service, complete section 8 of the
application or call us at 1-800-595-7827.
o sell
14
<PAGE>
How to use it
If you're buying shares, make your check payable to Northstar Funds and give it
to your dealer, who will forward it to us. When you're selling, give your
written request to your dealer, who may charge you a fee for this service.
Send your request to buy, sell or exchange in writing to:
Northstar Funds, c/o
First Data Investor Services Group Inc.
P.O. Box 5131
Westborough MA 01581-5131
Your letter should tell us
o your account number
o your social security number or taxpayer identification number
o the name the account is registered in
o the fund name and share class you're buying or selling, and, for exchanges,
the fund name and share class you're exchanging to
o the dollar value or number of shares you want to buy, sell or exchange. If
you're buying include a check payable to Northstar Funds with your request.
If you're selling or exchanging, your request must be signed by all
registered owners of the account.
We'll ask you to guarantee the signatures if:
o you are selling more than $50,000 worth of shares
o your address of record has changed in the past 30 days
o you want us to send the payment to someone other than the registered owner,
to an address other than the address of record, or in any form other than by
check.
Signatures can be guaranteed by a bank, a member of the national stock exchange
or another eligible institution.
You can sell or exchange up to $50,000 of your shares by telephone.
Call us at 1-800-595-7827 between 8:30 a.m. and 4:00 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 an systematic withdrawal program for an account you've
already signed up on an automatic investment plan.
(telephone graphic appears here)
If you have any questions, please call 1-800-595-7827.
15
<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 Northstar fund. You specify your preference when you open your
account.
You can choose to reinvest your distrubtions in one of three ways:
o reinvest both income dividends and capital gain distributions to buy
additional Class A, B or C shares of any Northstar fund you choose
o receive income dividends in cash and reinvest capital gain distributions to
buy additional Class A, B or C shares of any Northstar fund you choose
o 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.
16
<PAGE>
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.
(telephone graphic appears here)
If you have any questions, please call 1-800-595-7827.
17
<PAGE>
The business
of mutual funds
How the fund is organized and managed
The Northstar International 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 objectives 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 the fund because the fund investment
objective is 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 advice of the subadviser. The investment adviser is paid
out of the fund's management fee, which is listed on page 4.
Northstar Investment
Management Corporation Two Pickwick Plaza Greenwich, CT 06830 Portfolio managers
and sub-advisers You'll find profiles of the fund's portfolio managers and
sub-adviser beginning on page 6.
Administrator
Provides administrative, compliance and accounting services to the fund. The
administrator receives an annual administrative services fee from the fund of
.10% of the 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
18
<PAGE>
How dealers are compensated
Dealers receive payment for selling shares of the Northstar International 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.
o Class A investments
(% of offering price)
Commission received Amount
by dealers out of paid by the
sales charges you pay distributor
up to $99,999 4.00 --
$100,000 to $249,999 3.10 --
$250,000 to $499,999 2.30 --
$500,000 to $999,999 1.70 --
$1,000,000 to $2,499,999 0.00 1.00
$2,500,000 to $4,999,999 0.00 0.50
$5,000,000 and over 0.00 0.25
o Class B investments
Receives 4% of sale price from the distributor.
o Class C investments
Receives 1% of sale price from the distributor.
They are paid a fee by the distributor
for servicing your account
They receive a service fee depending on the average net asset value of the class
of shares their clients hold in the fund. These fees are paid from the 12-b1 fee
deducted from each fund class. In addition to covering the cost of commissions
and service fees, the 12-b1 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 12-b1 fees listed in the fund
information on page 4. Service and distribution fee percentages appear on page
9.
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.
If you have any questions, please call 1-800-595-7827.
19
<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
International Value Fund on page 4. This section provides information about the
risks associated with different kinds of securities. It also lists additional
investment practices that may involve elements of risk.
Equities
o Give the buyer ownership rights in the issuer. Common and preferred stocks,
convertible securities and stock purchase rights are types of equities.
o The market value of an equity security may go up or down rapidly depending
on market conditions. This affects the value of the shares of a fund, and
the value of your investment.
o Securities of smaller companies may be subject to more abrupt or erratic
market movements because they are traded in lower volume and are subject to
greater changes in earnings and growth prospects.
Foreign investments
o Securities issued by companies located in foreign countries.
o Subject to all of the risks associated with equity securities. There are
also other risks that can affect the value of foreign investments:
- foreign markets may be less regulated, have less volume and be less
liquid
- foreign securities may be less liquid and more volatile
- the value of the securities are affected by changes in currency
exchange rates and exchange control regulations
- the value of foreign securities may be affected by adverse political
and economic developments, seizure or nationalization of foreign
deposits, and government restrictions
- there is often less information available about foreign companies
and many countries do not have the same accounting, auditing and
financial reporting standards that we have in the United States.
Emerging markets
o Investments 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 and rapidly
changing interest and currency exchange rates, and their securities markets
are substantially less developed.
Depository receipts
o American, European and Global depository receipts 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.
20
<PAGE>
Other, higher risk
securities
Illiquid securities --the fund is limited to 5% of its net asset value
o Securities that can't be sold quickly at a reasonable price, or that can't
be sold on the open market. Includes restricted securities and private
placements.
o Used to seek higher profits.
o There may be fewer market players which can result in lower prices, and
sales can take longer to complete.
o Following guidelines established by the trustees of 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 (Rule 144A) or on foreign markets.
Derivative securities
The fund does not currently intend to make use of any derivatives, including
transactions in currency forwards for hedging purposes.
Investment practices
Repurchase agreements -- the fund is limited to 5% of its net asset value
o Buying a security from a bank or dealer who must buy it back at a fixed
price on a specified day. Repurchase agreements that mature after more than
seven days are considered to be illiquid investments. Any one investment in
this type of repurchase agreement can only be 5% of the fund's net asset
value.
o Used for temporary defensive purposes or to generate income from cash
balances.
o The bank or dealer may not be able to buy back the security.
Short-term trading -- no limit
o Selling a security soon after you buy it.
o Used when the fund needs to be more liquid, in response to changes in
interest rates and economic or other developments, or when a security has
reached its price or yield objective.
o May result in higher costs for brokerage commissions, dealer mark-ups and
other transactions costs, as well as taxable capital gains.
Temporary investments -- no limit
o Temporarily maintaining part or all of the fund's assets in cash or in U.S.
Government securities, commercial paper, banker's acceptances, repurchase
agreements and certificates of deposit.
o Used for temporary and defensive purposes in periods of unusual market
conditions.
o Provides lower returns.
When-issued securities and forward
commitments -- no limit
o A commitment to buy a security on a specific day in the future at a
specified price.
o Used to realize short-term profits.
o If made through a dealer, there is a risk that the dealer won't complete the
sale, and that the fund will lose out on a good yield or price.
o There is also a risk that the value of the security will change before the
transaction is settled, resulting in short-term losses instead of gains.
(telephone graphic appears here)
If you have any questions, please call 1-800-595-7827.
21
<PAGE>
Where to go
for more information
You'll find more information about the Northstar International 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 1997.
Statement of Additional Information (SAI)
The SAI contains complete information about the Northstar International Value
Fund. The SAI is legally part of this prospectus (it is incorporated by
reference).
A current SAI has been filed with the Securities and Exchange Commission.
Please write or call for a free copy of the Annual report or the SAI:
The Northstar Funds
2 Pickwick Plaza
Greenwich, CT
06830
1-800-595-7827
<PAGE>
<TABLE>
<CAPTION><S> <C> New Account Application
---------------------------------------------------------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
---------------------------------------------------------------------------------------------------------------------------------
Type of Account (Choose One Only):
/ / INDIVIDUAL / / JOINT ACCOUNT / / FOR A MINOR / / TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY
USE LINE A USE LINES A & B USE LINE C USE LINE D
Print name exactly as account is to be registered:
A._________________________________________________ ___-____-_____
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER
B._________________________________________________ ___-____-_____
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER
C._________________________________________________
CUSTODIAN'S NAME (FIRST, MIDDLE, LAST)
_________________________________________________ ____-____-_____
MINOR'S NAME (FIRST, MIDDLE, LAST) MINOR'S SOCIAL SECURITY NUMBER
_________________________________________________ ___-_________
TAX I.D. NUMBER
UNDER THE _____________ UNIFORM GIFTS/TRANSFERS TO MINORS ACT OR
NAME OF STATE
D._________________________________________________ ___-___-_____
NAME (IF A TRUST, INCLUDE DATE OF AGREEMENT) SOCIAL SECURITY NUMBER
---------------------------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
---------------------------------------------------------------------------------------------------------------------------------
___________________________________________________
STREET
( )______________________________________________
DAYTIME PHONE NUMBER
___________________________________________________
CITY STATE ZIP
---------------------------------------------------------------------------------------------------------------------------------
3 PURCHASE OF SHARES
---------------------------------------------------------------------------------------------------------------------------------
MINIMUM INITIAL INVESTMENT $2,500 / / MAKE CHECK PAYABLE TO NORTHSTAR FUNDS. Check enclosed for $__________
/ / Shares purchased and paid for through my/our investment dealer.
Trade Date_______ Order#_______
Number of Shares: Class A_______ Class B_______ Class C_______
Please check the box beside the name of each Northstar Advantage Fund being purchased and enter the dollar amount of each
purchase. All distributions will be reinvested in additional shares unless instructed otherwise.
/ / INTERNATIONAL VALUE FUND $_______
Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
/ / MONEY MARKET PORTFOLIO FUND $_______
(Money Market Account)
Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
*Please reinvest my dividends from ________________ to ________________
(Name of Fund) (Name of Fund)
---------------------------------------------------------------------------------------------------------------------------------
4 LETTER OF INTENT, RIGHT OF ACCUMULATION (CLASS A SHARES ONLY)
---------------------------------------------------------------------------------------------------------------------------------
LETTER OF INTENT
Although I/we have made no commitment to do so, I/we intend to invest the dollar amount indicated below within a 13-month
period in shares of one or more of the eligible Northstar Funds.
/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000
RIGHTS OF ACCUMULATION
If this account qualified for a Reduced Sales Charge under the terms of the current Prospectus, please list account numbers:
/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000
- -
---- -------- ---- ---------
---------------------------------------------------------------------------------------------------------------------------------
5 AGREEMENTS AND SIGNATURES
---------------------------------------------------------------------------------------------------------------------------------
I/We am/are of legal age and wish to establish an account in accordance with the terms and conditions of the current applicable
Prospectus, a copy of which has been received and read. I/We understand and agree that neither First Data nor the Northstar Funds
shall be held liable for any loss, liability, cost or expense for acting in accordance with this application, or any section
thereof. I/We acknowledge that the account(s) established by this application will be subject to the telephone exchange and
redemption privileges described in this current prospectus, unless indicated otherwise, with the understanding that the Fund,
Northstar and the Transfer Agent will not be able to verify the authenticity of any telephone or redemption order received from
persons other than registered representatives of Northstar Distributors, Inc. and that they will not be liable for following
telephone exchange or redemption instructions that prove to be fraudulent. Shareholders would bear the loss resulting from
instructions entered by an unauthorized third party.
Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification number and (2)
that I am not* subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue
Service has notified me that I am no longer subject to backup withholding.
*If you are subject to backup withholding, please cross through the word "not" in part (2) above.
---------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL (OR CUSTODIAN) DATE
---------------------------------------------------------------------------------------------------------------------------------
CO-OWNER (OR CORPORATE OFFICER, PARTNER OR TRUSTEE) DATE
---------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
---------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
---------------------------------------------------------------------------------------------------------------------------------
6 FOR DEALER USE ONLY
---------------------------------------------------------------------------------------------------------------------------------
We guarantee the signature(s) and legal capacity of the applicant(s) referred to herein, and in the case of a withdrawal program
we affirm that, in our opinion, the designated withdrawal is reasonable in view of the circumstances involved.
---------------------------------------------------------------------------------------------------------------------------------
DEALER NAME (PLEASE PRINT CAREFULLY) DEALER NO.
---------------------------------------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE (MUST BE PROVIDED FOR WITHDRAWAL PROGRAMS, TELEPHONE REDEMPTIONS AND TELEPHONE EXCHANGES)
---------------------------------------------------------------------------------------------------------------------------------
BRANCH NUMBER BRANCH ADDRESS
---------------------------------------------------------------------------------------------------------------------------------
REP NAME (PLEASE PRINT CAREFULLY) FIRST AND LAST NAME PHONE NUMBER (IMPORTANT) REP NUMBER
( )
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
------------------------------------------------
Upon completion of the application, please
return with a check made payable to:
NORTHSTAR FUNDS,
c/o FIRST DATA, Box 8758, Providence, RI 02940
<TABLE>
<CAPTION>
<S> <C>
SPECIAL ACCOUNT OPTION
---------------------------------------------------------------------------------------------------------------------------------
7 AUTOMATIC INVESTMENT PLAN
---------------------------------------------------------------------------------------------------------------------------------
Attach a VOIDED CHECK from your bank account and a check for an initial deposit to establish this plan (minimum $25). Please
complete the following information to invest automatically the dollar amount stated below on approximately the 15th / /, 30th
/ / or the 15th and 30th / /, of the month.
The applicant authorizes the Northstar Funds to draw monthly drafts on your bank account number _________ and use the proceeds
($25 minimum) therefrom to purchase shares of Northstar ___________ _____________
FUND NAME $ AMOUNT
Registered in the name(s) of __________________________________________
RESTRICTIONS
Each purchase of shares will be made at the current offering price determined as of the close of business on the day on which
such purchase is made. Automatic investments may be discontinued by either Northstar Funds or the purchaser upon 30 days
written notice to the other.
The Northstar Funds reserves the right to cancel any transaction which was executed in reliance on a draft authorized where the
bank upon which the draft was drawn refused to make payment thereon for any reason.
ATTACH VOID CHECK HERE
---------------------------------------------------------------------------------------------------------------------------------
8 WITHDRAW PROGRAM
---------------------------------------------------------------------------------------------------------------------------------
A Withdrawal Plan is available on Class A shares (non-certificated shares only) provided the Fund being purchased has a value of
$5,000 or more.
Withdrawals with respect to Class B and Class C shares are limited (see the Prospectus) and are conditional upon dividends and
capital gains being automatically reinvested.
1. The amount of each payment shall be ($25 minimum)
--------- -------- --------- --------
FUND NAME $ AMOUNT FUND NAME $ AMOUNT
2. Payments are to be made / / Monthly / / Quarterly / / Semi-Annually / / Annually on the / / 1st or / / 15th of the month
Choose one of the following methods of distribution.
/ / ACH Please have my payments electronically transferred to my bank. I have attached the required voided check and I have
verified that my bank is a member of the Automated Clearing House (ACH).
/ / MAIL Please have my payments mailed. I understand that the payments will be made payable to me and mailed to my account
mailing address unless a special designation is referenced below:
---------------------------------------------------------------------------------------------------------------------------------
NAME (PLEASE PRINT CAREFULLY.)
---------------------------------------------------------------------------------------------------------------------------------
STREET
---------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE YOUR BANK ACCOUNT NUMBER
---------------------------------------------------------------------------------------------------------------------------------
ATTACH VOID CHECK HERE
---------------------------------------------------------------------------------------------------------------------------------
9 TELEPHONE EXCHANGE REDEMPTION AND EXPEDITED TELEPHONE REDEMPTION
---------------------------------------------------------------------------------------------------------------------------------
Signature guarantees are required if: 1. Redemption is over $50,000.
2. Proceeds are to be sent to address other than record.
ALL SHAREHOLDERS AND THEIR DEALER REPRESENTATIVES WILL AUTOMATICALLY RECEIVE TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES,
(NON-CERTIFICATED SHARES ONLY) UNLESS AN ELECTION NOT TO RECEIVE THESE PRIVILEGES IS EXERCISED BELOW.
/ / DO NOT CODE MY / / DO NOT CODE MY
ACCOUNT FOR TELEPHONE ACCOUNT FOR TELEPHONE
EXCHANGE PRIVILEGE. REDEMPTION PRIVILEGE.
/ / PLEASE WIRE REDEMPTION PROCEEDS TO MY BANK. (I UNDERSTAND THE MINIMUM FOR WIRES IS $1,000.) MY VOIDED CHECK IS ATTACHED.
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JULY 4, 1997
NORTHSTAR International 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 July 4, 1997, 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, Inc. ("Brandes" or the "Subadviser") to serve as
subadviser to the Northstar International 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................................................. 2
INVESTMENT TECHNIQUES................................................... 3
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION......................... 7
SERVICES OF NORTHSTAR, THE SUBADVISER
AND THE ADMINISTRATOR....................................... 9
NET ASSET VALUE......................................................... 11
PURCHASES AND REDEMPTIONS............................................... 13
DIVIDENDS, DISTRIBUTIONS AND TAXES...................................... 14
UNDERWRITER AND DISTRIBUTION SERVICES................................... 20
TRUSTEES AND OFFICERS................................................... 22
OTHER INFORMATION....................................................... 25
PERFORMANCE INFORMATION................................................. 26
FINANCIAL STATEMENTS.................................................... 29
<PAGE>
INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
Northstar International Value Fund. The Fund has adopted investment
restrictions numbered 1 through 6 as fundamental policies. These restrictions
cannot be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940, as amended) of the Fund's outstanding voting
shares. Investment restrictions numbered 7 through 12 are not fundamental
policies and may be changed by vote of a majority of the Trust's Board members
at any time. The Fund may not:
1. Issue senior securities, except to the extent permitted under the
Investment Company Act of 1940, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 10% of
its total assets (not including the amount borrowed), provided that it will not
make investments while borrowings in excess of 5% of the value of its total
assets are outstanding;
2. Act as underwriter (except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities in its
investment portfolio);
3. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities), except that the Fund reserves the right to invest all of
its assets in shares of another investment company;
4. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although the Fund may purchase and sell securities which
are secured by real estate, securities of companies which invest or deal in real
estate and securities issued by real estate investment trusts);
5. Purchase or sell commodities or commodity futures contracts, except
that the Fund may purchase and sell stock index futures contracts for hedging
purposes to the extent permitted under applicable federal and state laws and
regulations and except that the Fund may engage in foreign exchange forward
contracts;
6. Make loans (except for purchases of debt securities consistent with the
investment policies of the Fund and except for repurchase agreements);
7. Make short sales of securities or maintain a short position, except for
short sales against the box;
8. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions;
9. Write put or call options, except that the Fund may (i) write covered
call options on individual securities and on stock indices; (ii) purchase put
and call options on securities which are eligible for purchase by the Fund and
on stock indices; and (iii) engage in closing transactions with respect to its
<PAGE>
options writing and purchases, in all cases subject to applicable federal and
state laws and regulations;
10. Purchase any security if as a result the Fund would then hold more
than 10% of any class of voting securities of an issuer (taking all common stock
issues as a single class, all preferred stock issues as a single class, and all
debt issues as a single class), except that the Fund reserves the right to
invest all of its assets in a class of voting securities of another investment
company;
11. Invest more than 10% of its assets in the securities of other
investment companies or purchase more than 3% of any other investment company's
voting securities or make any other investment in other investment companies
except as permitted by federal and state law, except that the Fund reserves the
right to invest all of its assets in another investment company;
12. Invest more than 15% of its net assets in illiquid securities.
INVESTMENT TECHNIQUES
- ------------------------------------------------------------------------------
Derivative Instruments. The Fund may invest in Derivative Instruments (as
defined in the Fund's Prospectus) for a variety of reasons, including to hedge
certain market risks, to provide a substitute for purchasing or selling
particular securities or to increase potential income gain. Derivatives may
provide a cheaper, quicker or more specifically focused way for the Fund to
invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit a Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., margin requirements) operated by
the clearing agency in order to reduce overall credit risk. As a result, unless
the clearing agency defaults, there is relatively little counterparty credit
risk associated with Derivatives purchased on an exchange. By contrast, no
clearing agency guarantees over-the-counter Derivatives. Therefore, each party
to an over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, Northstar and the 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.
<PAGE>
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 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. In the
case of dramatically rising or falling markets, the loss from investing
in futures is potentially unlimited.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant market,
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if the Fund uses
futures to hedge against the possibility of a decline in the market value of
securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, the Fund may be required to segregate cash or high quality
money market instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting the Fund's ability otherwise to
invest those assets.
Specific Futures Transactions. The 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
<PAGE>
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 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 the underlying security or otherwise covers the transaction
by segregating cash or other 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.
<PAGE>
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 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-settled option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated transactions
from financial institutions, including securities brokerage firms.
Successful use by the 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 yield. Northstar will use standards set by the Fund's Trustees in reviewing
the creditworthiness of parties to repurchase agreements with the Fund. In
<PAGE>
addition, no more than an aggregate of 15% 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 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 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
Investments in foreign securities involve special risks, including
currency fluctuations, political or economic instability in the country of issue
and the possible imposition of exchange controls or other laws or restrictions.
In addition, securities prices in foreign markets are generally subject to
different economic, financial, political and social factors than are the prices
of securities in U.S. markets. With respect to some foreign countries there may
be the possibility of expropriation or confiscatory taxation, limitations on
liquidity of securities of political or economic developments which could affect
the foreign investments of the Fund. Moreover, securities of foreign issuers
generally will not be registered with the SEC, and such issuers will generally
not be subject to the SEC's reporting requirements. Accordingly, there is likely
to be less publicly available information concerning certain of the foreign
issuers of securities held by the Fund than is available concerning U.S.
companies. Foreign companies are also generally not subject to uniform
accounting, auditing and financial reporting standards or to practices and
requirements comparable to those applicable to U.S. companies. There may also be
less government supervision and regulation of foreign broker-dealers, financial
institutions and listed companies than exists in the U.S. These factors could
make foreign investments, especially those in developing countries, more
volatile. All of the above issues should be considered before investing in the
Fund.
Emerging Markets and Related Risks
The Fund may invest up to 25% of its assets in securities of companies
located in countries with emerging securities markets. Emerging markets are the
capital markets of any country that in the opinion of the Adviser is generally
considered a developing country by the international financial community.
Currently, these markets include, but are not limited to, the markets of
Argentina, Brazil, Chile, China, Colombia, Czech Republic, Greece, Hungary,
India, Indonesia, Israel, Korea, Malaysia, Mexico, Pakistan, Peru, the
Philippines, Poland, Portugal, Slovak Republic, Sri Lanka, Taiwan, Thailand,
Turkey, Venezuela and countries that comprise the former Soviet Union. As
opportunities to invest in other emerging markets countries develop, the Fund
expects to expand and diversify further the countries in which it invests.
Investing in emerging market securities involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
markets countries may have fixed or managed currencies that are not
free-floating against the U.S. dollar. Further, certain currencies may not be
traded internationally. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base, governmental controls and investment restrictions that are subject to
political change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries.
Emerging securities markets typically have substantially less volume
than U.S. markets, securities in many of such markets are less liquid, and their
prices often are more volatile than securities of comparable U.S. companies.
Such markets often have different clearance and settlement procedures for
securities transactions, and in some markets there have been times when
settlements have been unable to keep pace with the volume of transactions,
making it difficult to conduct transactions. Delays in settlement could result
in temporary periods when assets which the Fund desires to invest in emerging
markets may be uninvested. Settlement problems in emerging markets countries
also could cause the Fund to miss attractive investment opportunities.
Satisfactory custodial services may not be available in some emerging markets
countries, which may result in the Fund incurring additional costs and delays in
the transportation and custody of such securities.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
------------------------------------------------------------------------------
Northstar or the Sub-adviser 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
<PAGE>
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, rather than
seeking to exploit its leverage to force the lowest possible commission rate.
Over-the-counter purchases and sales are transacted directly with principal
market-makers, except in those circumstances where, in the opinion of Northstar,
better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income 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.
<PAGE>
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 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 Code,
including a requirement that less than 30% of the Fund's annual gross income be
derived from gains on the sale of securities and certain other assets held for
less than three months.
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"). Provided the Trust's officers are satisfied
that the Fund is receiving the most favorable price and execution available,
Northstar may also consider the sale of the Fund's shares as a factor in the
selection of broker-dealers to execute its portfolio transactions.
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.
<PAGE>
SERVICES OF NORTHSTAR, THE SUBADVISER AND THE ADMINISTRATOR
------------------------------------------------------------------------------
Pursuant to an Investment Advisory Agreement with the Fund, Northstar
Investment Management Corporation 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, Inc. 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, majority-owned subsidiary of ReliaStar Financial
Corp. ("ReliaStar"). ReliaStar's address is 20 Washington Avenue South,
Minneapolis, Minnesota 55401. Combined minority interests in Northstar held by
members of senior management currently equal 20%. 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. Northstar, Northstar Administrators Corporation and
Brandes Investment Partners, L.P. have agreed to waive their fees until the
assets of the Fund exceed $50 million.
The Investment Advisory Agreement for the Fund was originally approved by
the Trustees of the Northstar Trust on January 23, 1997, and by the sole
Shareholder of the Fund on January 23, 1997. The Investment Advisory Agreement
will continue in effect until January 23, 1999 and then will continue in effect
from year to year if specifically approved annually by (a) the Trustees, acting
on behalf of the Fund, including a majority of the Disinterested Trustees, or
(b) a majority of the outstanding voting securities of each class of the Fund as
defined in the 1940 Act.
The Fund's Investment Advisory Agreement may be terminated as to any
class, without penalty and at any time, by a similar vote upon not more than 60
days' nor less than 30 days' written notice by Northstar, the Trustees, or a
majority of the outstanding voting securities of such class 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.
<PAGE>
Pursuant to a Subadvisory Agreement between Northstar and Brandes
Investment Partners, L.P. ("Brandes"), dated February 24, 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 Fund, will manage the Fund's
portfolio investments, consistently with their investment objective, and will
execute any of the Fund's investment policies that it deems appropriate to
utilize from time to time. Fees payable under the Subadvisory Agreement will
accrue daily and be paid monthly by Northstar. As compensation for its services,
Northstar will pay Brandes at the annual rate of 50% of the management fee that
the Fund pays Northstar. Brandes' address is 12750 High Bluff Drive, San Diego,
California 92130. Charles Brandes, who controls the general partner of Brandes,
serves as one of the managing directors of Brandes. The Subadvisory Agreement
for the Fund was approved by the Trustees of the Fund on January 23, 1997. The
Subadvisory Agreement may be terminated without payment of any penalty by
Northstar, Brandes, the Trustees of the Fund, or the shareholders of the Fund on
not more than 60 days' and not less than 30 days' prior written notice.
Otherwise, the Subadvisory Agreement will remain in effect for two years and
will, thereafter, continue in effect from year to year, subject to the annual
approval of the Trustees of the Fund, or the vote of a majority of the
outstanding voting securities of the Fund, and the vote, cast in person at a
meeting duly called and held, of a majority of the Trustees of the Fund who are
not parties to the Subadvisory Agreement or "interested persons" (as defined in
the 1940 Act) of any such Party.
Northstar Administrators Corporation serves as administrator for the Fund,
pursuant to an Administrative Services Agreement with the Fund. Subject to the
supervision of the Board of Trustees, the Administrator provides the overall
business management and administrative services necessary to the proper conduct
of the 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
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 was approved by the Trustees on
January 23, 1997 and will continue in effect from year to year thereafter,
provided such continuance is approved annually by a majority of the Trustees.
The 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 .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
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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
<PAGE>
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 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 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 "How Net Asset Value is Determined" in the Prospectus.
<PAGE>
PURCHASES AND REDEMPTIONS
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Shares issued pursuant to the automatic reinvestment of income dividend
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 Funds 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.
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
<PAGE>
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 Funds and the Money Market Portfolio: (i) the shares that will be acquired
in the exchange (the "Acquired Shares") are available for sale in the
shareholder's state of residence; (ii) the Acquired shares will be registered to
the same shareholder account as the shares to be surrendered (the "Exchanged
Shares"); (iii) the Exchanged Shares must have been held in the shareholder's
account for at least 30 days prior to the exchange; (iv) except for exchanges
into the Money Market Portfolios, the account value of the Fund whose shares are
to be acquired must equal or exceed the minimum initial investment amount
required by that Fund after the exchange is implemented; and (v) a properly
executed exchange request has been received by the Transfer Agent.
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 prominent notice to shareholders. Such
notice will be given at least 60 days in advance. It is the policy of Northstar
to discourage and prevent frequent trading by shareholders among the 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.
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
<PAGE>
with respect to its business of investing in stock, securities or currencies;
(ii) derive less than 30% of its gross income each taxable year from the sale or
other disposition of certain assets, including securities, held for less than
three months (the "30% Limitation"); and (iii) at the end of each quarter of the
taxable year maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment companies, and
other securities of issuers that represent, with respect to each issuer, no more
than 5% the value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and with no more than 25% of its assets invested in
the securities (other than those of the U.S. Government or other regulated
investment companies) of any one issuer or of two or more issuers that the Fund
controls and that are engaged in the same, similar or related trades and
businesses. As a regulated investment company, 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 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
<PAGE>
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. The 30% limitation may
limit the extent to which the Fund will be able to engage in transactions in
options, futures contracts and forward contracts.
Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time 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.
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.
<PAGE>
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 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.
<PAGE>
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, the 30% Limitation 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 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.
<PAGE>
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 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.
<PAGE>
UNDERWRITER AND DISTRIBUTION SERVICES
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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 Plan or in any agreements. The Underwriting Agreements will
terminate automatically in the event of their assignment.
In addition to the amount paid to dealers pursuant to the sales charge
table in the Prospectus, the Underwriter from time to time pays, from its own
resources or pursuant to the Plans, a bonus or other incentive to dealers (other
than the Underwriter) that employ a registered representative who sells a
minimum dollar amount of the shares of 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.
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)
<PAGE>
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.
If the Plans are terminated in accordance with their terms, the
obligations of the Fund to compensate the Underwriter for distribution related
services pursuant to the Plans will cease; however, subject to approval by the
Trustees, including a majority of the independent Trustees, the Fund may
continue to make payments past the date on which each Plan terminates up to the
annual limits set forth in each Plan for the purpose of compensating the
Underwriter for services that were incurred during the term of the Plan.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit 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 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 the Fund may bear pursuant to the applicable Plan
without approval of the shareholders of the Fund 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 Class of shares
of the Fund.
<PAGE>
TRUSTEES AND OFFICERS
------------------------------------------------------------------------------
The Trustees and principal Officers of the Fund and their business
affiliations for the past five years are set forth below. Unless otherwise
noted, the mailing address of the Trustees and Officers is Two Pickwick Plaza,
Greenwich, Connecticut 06830.
ROBERT B. GOODE, JR., Trustee. Age: 66. Currently retired. From 1990 to
1991, Chairman of The First Reinsurance Company of Hartford. From 1987
to 1989, President and Director of American Skandia Life Assurance
Company. Since October 1993, Trustee of the Northstar affiliated
investment companies.
PAUL S. DOHERTY, Trustee. Age: 62. President, Doherty, Wallace,
Pillsbury and Murphy, P.C., Attorneys. Director, Tambrands, Inc. Since
October 1993, Trustee of the Northstar affiliated investment companies.
DAVID W. WALLACE, Trustee. Age: 72. Chairman of Putnam Trust
Company, Lone Star Industries and FECO Engineered Systems, Inc. He
is also President and Trustee of Robert R. Young Foundation and Governor
of the New York Hospital. Director of UMC Electronics and Zurn
Industries, Inc. Former Chairman and Chief Executive Officer, Todd
Shipyards and Bangor Punta Corporation, and former Chairman and Chief
Executive Officer of National Securities & Research Corporation. Since
October 1993, Trustee of the Northstar affiliated investment companies.
*MARK L. LIPSON, Trustee and President. Age: 47. Director, Chairman
and Chief Executive Officer of Northstar and Northstar, Inc. Director
and President of Northstar Administrators Corporation and Director and
Chairman of Northstar Distributors, Inc., President and Trustee of the
Northstar affiliated investment companies since October 1993. Prior to
August, 1993, Director, President and Chief Executive Officer of
National Securities & Research Corporation and President and
Director/Trustee of the National Affiliated Investment Companies and
certain of National's subsidiaries.
*JOHN G. TURNER, Trustee. Age: 57. Since May 1993, Chairman and CEO of
ReliaStar Financial Corporation and ReliaStar Life Insurance Co.
and Chairman of other ReliaStar Affiliated Insurance Companies since
1995. Since October 1993, Director of Northstar and affiliates. Prior to
May 1993, President and CEO of ReliaStar and Northwestern National.
ALAN L. GOSULE, Trustee. Age: 55. Partner, Rogers & Wells. Director,
F.L. Putnam Investment Management Co., Inc.
DAVID W.C. PUTNAM, Trustee. Age: 67. 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.
<PAGE>
JOHN R. SMITH, Trustee. Age: 73. From 1970-1991, Financial Vice
President of Boston College; President of New England Fiduciary
Company (financial planning) since 1991; Chairman of Massachusetts
Educational Financing Authority since 1987; Vice Chairman of
Massachusetts Health and Education Authority.
WALTER H. MAY, Trustee. Age: 60. Retired. Former Senior Executive for
Piper Jaffrey, Inc.
THOMAS OLE DIAL, Vice President. Age: 40. Executive Vice President and
Chief Investment Officer - Fixed Income of Northstar and Principal, T.D.
& Associates, Inc. From 1989 to August 1993, Executive Vice President
and Chief Investment Officer - Fixed Income of National Securities and
Research Corporation, Vice President of National Affiliated Investment
Companies, and Vice President of NSR Asset Management Corporation. From
1988 to 1989, President of Dial Captial Management.
GEOFFREY WADSWORTH, Vice President. Age: 53. Vice President of
Northstar. Former Vice President and Portfolio Manager with National
Securities & Research Corporation.
AGNES MULLADY, Vice President and Treasurer. Age: 38. 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.
- --------------------
*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 Funds. All
Officers and Interested Trustees of the Funds are compensated by Northstar or
Northstar Administrators Corporation. Trustees who are not "interested persons"
of the Adviser are paid an annual retainer fee of $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.
<PAGE>
As of December 31, 1996 all Trustees and executive officers of the Fund
as a group owned beneficially or of record less than 1% of the outstanding
securities of the Fund. To the knowledge of the Fund, as of December 31, 1996,
no shareholder owned beneficially (b) or of record (r) more than 5% of the
Fund's outstanding shares.
COMPENSATION TABLE
PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PENSION BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FROM ALL FUNDS IN
FUND FUND EXPENSES RETIREMENT NORTHSTAR COMPLEX(B)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr...................... (a)13,000 0 0 13,500
Paul S. Doherty.......................... (a)14,000 0 0 14,500
David W. Wallace......................... (a)14,000 0 0 14,500
Mark L. Lipson........................... (a) 0 0 0 0
John G. Turner........................... (a) 0 0 0 0
Alan L. Gosule........................... (a)14,000 0 0 14,500
David W.C. Putnam........................ (a)10,000 0 0 10,000
John R. Smith............................ (a)14,000 0 0 14,500
Walter H. May............................ (a)13,000 0 0 13,500
</TABLE>
(a) See table below for Fund specific compensation.
(b) Compensation paid by the Northstar Trust funds, the Northstar Variable Trust
funds and the remaining six funds, Northstar Special, Growth, Balance Sheet
Opportunities, Government Securities, Strategic Income and High Yield Funds,
formerly advised by BSC.
26
<PAGE>
INDIVIDUAL FUND
FISCAL YEAR COMPENSATION TABLES
<TABLE>
<CAPTION>
INCOME AND GROWTH HIGH TOTAL RETURN GROWTH + VALUE SPECIAL(C) GROWTH(C)
<S> <C> <C> <C> <C> <C>
Robert B. Goode, Jr.................. 2,063 1,563 0 1,563 1,563
Paul S. Doherty...................... 2,313 1,813 0 1,646 1,646
David W. Wallace..................... 2,313 1,813 0 1,646 1,646
Mark L. Lipson....................... 0 0 0 0 0
John G. Turner....................... 0 0 0 0 0
Alan L. Gosule....................... 2,313 1,813 0 1,646 1,646
David W.C. Putnam.................... 2,063 1,563 0 1,188 1,188
John R. Smith........................ 2,312 2,312 0 1,646 1,646
Walter H. May....................... 2,000 1,500 0 1,583 1,583
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET GOVERNMENT
OPPORTUNITIES(C) SECURITIES(C) STRATEGIC INCOME(C) HIGH YIELD(C)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr.................................. 1,563 1,563 1,563 1,563
Paul S. Doherty...................................... 1,646 1,646 1,646 1,646
David W. Wallace..................................... 1,646 1,646 1,646 1,646
Mark L. Lipson....................................... 0 0 0 0
John G. Turner....................................... 0 0 0 0
Alan L. Gosule....................................... 1,646 1,646 1,646 1,646
David W.C. Putnam.................................... 1,188 1,188 1,188 1,188
John R. Smith........................................ 1,646 1,646 1,646 1,646
Walter H. May........................................ 1,583 1,583 1,583 1,583
</TABLE>
(c) Prior to June 2, 1995 the Trustees who were not interested persons, other
than David Putnam, were paid a per fund fee of $500 for each full calendar
year during which services were rendered to the Funds. In addition, they
were paid a per fund fee of $250 for attending each of the Trustees'
meetings, $100 per fund for attending each audit committee meeting, $100
audit committee retainer per fund and were reimbursed for outofpocket
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.
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. Northstar Trust (formerly
"Northstar Advantage Trust"), and two of its 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 was organized in 1996.
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.
<PAGE>
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 Fund contains provisions intended to limit such
liability and to provide indemnification out of Fund property of any shareholder
charged or held personally liable for obligations or liabilities of 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 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
<PAGE>
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:
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.
<PAGE>
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 a Fund's sales charge 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 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 a Fund
with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in shares of
the Fund. For example, certificates of deposit may have fixed rates of return
and may be insured as to principal and interest by the FDIC, while a Fund's
returns will fluctuate and its share values and returns are not guaranteed.
Money market accounts offered by banks also may be insured by the FDIC and may
offer stability of principal. U.S. Treasury securities are guaranteed as to
principal and interest by the full faith and credit of the U.S. government.
Money market mutual funds may seek to offer a fixed price per share.
The performance of a Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of the
Fund for any period in the future. The performance of a Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest, and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.
<PAGE>
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
<PAGE>
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 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 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 "How Net Asset Value is Determined" in the Prospectus.
<PAGE>
PURCHASES AND REDEMPTIONS
------------------------------------------------------------------------------
Shares issued pursuant to the automatic reinvestment of income dividend
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 Funds 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.
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
<PAGE>
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 Funds and the Money Market Portfolio: (i) the shares that will be acquired
in the exchange (the "Acquired Shares") are available for sale in the
shareholder's state of residence; (ii) the Acquired shares will be registered to
the same shareholder account as the shares to be surrendered (the "Exchanged
Shares"); (iii) the Exchanged Shares must have been held in the shareholder's
account for at least 30 days prior to the exchange; (iv) except for exchanges
into the Money Market Portfolios, the account value of the Fund whose shares are
to be acquired must equal or exceed the minimum initial investment amount
required by that Fund after the exchange is implemented; and (v) a properly
executed exchange request has been received by the Transfer Agent.
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 prominent notice to shareholders. Such
notice will be given at least 60 days in advance. It is the policy of Northstar
to discourage and prevent frequent trading by shareholders among the 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.
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
<PAGE>
with respect to its business of investing in stock, securities or currencies;
(ii) derive less than 30% of its gross income each taxable year from the sale or
other disposition of certain assets, including securities, held for less than
three months (the "30% Limitation"); and (iii) at the end of each quarter of the
taxable year maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment companies, and
other securities of issuers that represent, with respect to each issuer, no more
than 5% the value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and with no more than 25% of its assets invested in
the securities (other than those of the U.S. Government or other regulated
investment companies) of any one issuer or of two or more issuers that the Fund
controls and that are engaged in the same, similar or related trades and
businesses. As a regulated investment company, 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 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
<PAGE>
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. The 30% limitation may
limit the extent to which the Fund will be able to engage in transactions in
options, futures contracts and forward contracts.
Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time 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.
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.
<PAGE>
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 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.
<PAGE>
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, the 30% Limitation 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 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.
<PAGE>
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 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.
<PAGE>
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 Plan or in any agreements. The Underwriting Agreements will
terminate automatically in the event of their assignment.
In addition to the amount paid to dealers pursuant to the sales charge
table in the Prospectus, the Underwriter from time to time pays, from its own
resources or pursuant to the Plans, a bonus or other incentive to dealers (other
than the Underwriter) that employ a registered representative who sells a
minimum dollar amount of the shares of 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.
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)
<PAGE>
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.
If the Plans are terminated in accordance with their terms, the
obligations of the Fund to compensate the Underwriter for distribution related
services pursuant to the Plans will cease; however, subject to approval by the
Trustees, including a majority of the independent Trustees, the Fund may
continue to make payments past the date on which each Plan terminates up to the
annual limits set forth in each Plan for the purpose of compensating the
Underwriter for services that were incurred during the term of the Plan.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit 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 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 the Fund may bear pursuant to the applicable Plan
without approval of the shareholders of the Fund 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 Class of shares
of the Fund.
<PAGE>
TRUSTEES AND OFFICERS
------------------------------------------------------------------------------
The Trustees and principal Officers of the Fund and their business
affiliations for the past five years are set forth below. Unless otherwise
noted, the mailing address of the Trustees and Officers is Two Pickwick Plaza,
Greenwich, Connecticut 06830.
ROBERT B. GOODE, JR., Trustee. Age: 66. Currently retired. From 1990 to
1991, Chairman of The First Reinsurance Company of Hartford. From 1987
to 1989, President and Director of American Skandia Life Assurance
Company. Since October 1993, Trustee of the Northstar affiliated
investment companies.
PAUL S. DOHERTY, Trustee. Age: 62. President, Doherty, Wallace,
Pillsbury and Murphy, P.C., Attorneys. Director, Tambrands, Inc. Since
October 1993, Trustee of the Northstar affiliated investment companies.
DAVID W. WALLACE, Trustee. Age: 72. Chairman of Putnam Trust
Company, Lone Star Industries and FECO Engineered Systems, Inc. He
is also President and Trustee of Robert R. Young Foundation and Governor
of the New York Hospital. Director of UMC Electronics and Zurn
Industries, Inc. Former Chairman and Chief Executive Officer, Todd
Shipyards and Bangor Punta Corporation, and former Chairman and Chief
Executive Officer of National Securities & Research Corporation. Since
October 1993, Trustee of the Northstar affiliated investment companies.
*MARK L. LIPSON, Trustee and President. Age: 47. Director, Chairman
and Chief Executive Officer of Northstar and Northstar, Inc. Director
and President of Northstar Administrators Corporation and Director and
Chairman of Northstar Distributors, Inc., President and Trustee of the
Northstar affiliated investment companies since October 1993. Prior to
August, 1993, Director, President and Chief Executive Officer of
National Securities & Research Corporation and President and
Director/Trustee of the National Affiliated Investment Companies and
certain of National's subsidiaries.
*JOHN G. TURNER, Trustee. Age: 57. Since May 1993, Chairman and CEO of
ReliaStar Financial Corporation and ReliaStar Life Insurance Co.
and Chairman of other ReliaStar Affiliated Insurance Companies since
1995. Since October 1993, Director of Northstar and affiliates. Prior to
May 1993, President and CEO of ReliaStar and Northwestern National.
ALAN L. GOSULE, Trustee. Age: 55. Partner, Rogers & Wells. Director,
F.L. Putnam Investment Management Co., Inc.
DAVID W.C. PUTNAM, Trustee. Age: 67. 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.
<PAGE>
JOHN R. SMITH, Trustee. Age: 73. From 1970-1991, Financial Vice
President of Boston College; President of New England Fiduciary
Company (financial planning) since 1991; Chairman of Massachusetts
Educational Financing Authority since 1987; Vice Chairman of
Massachusetts Health and Education Authority.
WALTER H. MAY, Trustee. Age: 60. Retired. Former Senior Executive for
Piper Jaffrey, Inc.
THOMAS OLE DIAL, Vice President. Age: 40. Executive Vice President and
Chief Investment Officer - Fixed Income of Northstar and Principal, T.D.
& Associates, Inc. From 1989 to August 1993, Executive Vice President
and Chief Investment Officer - Fixed Income of National Securities and
Research Corporation, Vice President of National Affiliated Investment
Companies, and Vice President of NSR Asset Management Corporation. From
1988 to 1989, President of Dial Captial Management.
GEOFFREY WADSWORTH, Vice President. Age: 53. Vice President of
Northstar. Former Vice President and Portfolio Manager with National
Securities & Research Corporation.
AGNES MULLADY, Vice President and Treasurer. Age: 38. 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.
- --------------------
*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 Funds. All
Officers and Interested Trustees of the Funds are compensated by Northstar or
Northstar Administrators Corporation. Trustees who are not "interested persons"
of the Adviser are paid an annual retainer fee of $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.
<PAGE>
As of December 31, 1996 all Trustees and executive officers of the Fund
as a group owned beneficially or of record less than 1% of the outstanding
securities of the Fund. To the knowledge of the Fund, as of December 31, 1996,
no shareholder owned beneficially (b) or of record (r) more than 5% of the
Fund's outstanding shares.
COMPENSATION TABLE
PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PENSION BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FROM ALL FUNDS IN
FUND FUND EXPENSES RETIREMENT NORTHSTAR COMPLEX(B)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr...................... (a)13,000 0 0 13,500
Paul S. Doherty.......................... (a)14,000 0 0 14,500
David W. Wallace......................... (a)14,000 0 0 14,500
Mark L. Lipson........................... (a) 0 0 0 0
John G. Turner........................... (a) 0 0 0 0
Alan L. Gosule........................... (a)14,000 0 0 14,500
David W.C. Putnam........................ (a)10,000 0 0 10,000
John R. Smith............................ (a)14,000 0 0 14,500
Walter H. May............................ (a)13,000 0 0 13,500
</TABLE>
(a) See table below for Fund specific compensation.
(b) Compensation paid by the Northstar Trust funds, the Northstar Variable Trust
funds and the remaining six funds, Northstar Special, Growth, Balance Sheet
Opportunities, Government Securities, Strategic Income and High Yield Funds,
formerly advised by BSC.
26
<PAGE>
INDIVIDUAL FUND
FISCAL YEAR COMPENSATION TABLES
<TABLE>
<CAPTION>
INCOME AND GROWTH HIGH TOTAL RETURN GROWTH + VALUE SPECIAL(C) GROWTH(C)
<S> <C> <C> <C> <C> <C>
Robert B. Goode, Jr.................. 2,063 1,563 0 1,563 1,563
Paul S. Doherty...................... 2,313 1,813 0 1,646 1,646
David W. Wallace..................... 2,313 1,813 0 1,646 1,646
Mark L. Lipson....................... 0 0 0 0 0
John G. Turner....................... 0 0 0 0 0
Alan L. Gosule....................... 2,313 1,813 0 1,646 1,646
David W.C. Putnam.................... 2,063 1,563 0 1,188 1,188
John R. Smith........................ 2,312 2,312 0 1,646 1,646
Walter H. May....................... 2,000 1,500 0 1,583 1,583
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET GOVERNMENT
OPPORTUNITIES(C) SECURITIES(C) STRATEGIC INCOME(C) HIGH YIELD(C)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr.................................. 1,563 1,563 1,563 1,563
Paul S. Doherty...................................... 1,646 1,646 1,646 1,646
David W. Wallace..................................... 1,646 1,646 1,646 1,646
Mark L. Lipson....................................... 0 0 0 0
John G. Turner....................................... 0 0 0 0
Alan L. Gosule....................................... 1,646 1,646 1,646 1,646
David W.C. Putnam.................................... 1,188 1,188 1,188 1,188
John R. Smith........................................ 1,646 1,646 1,646 1,646
Walter H. May........................................ 1,583 1,583 1,583 1,583
</TABLE>
(c) Prior to June 2, 1995 the Trustees who were not interested persons, other
than David Putnam, were paid a per fund fee of $500 for each full calendar
year during which services were rendered to the Funds. In addition, they
were paid a per fund fee of $250 for attending each of the Trustees'
meetings, $100 per fund for attending each audit committee meeting, $100
audit committee retainer per fund and were reimbursed for outofpocket
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.
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. Northstar Trust (formerly
"Northstar Advantage Trust"), and two of its 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 was organized in 1996.
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.
<PAGE>
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 Fund contains provisions intended to limit such
liability and to provide indemnification out of Fund property of any shareholder
charged or held personally liable for obligations or liabilities of 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 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
<PAGE>
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:
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.
<PAGE>
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 a Fund's sales charge 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 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 a Fund
with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in shares of
the Fund. For example, certificates of deposit may have fixed rates of return
and may be insured as to principal and interest by the FDIC, while a Fund's
returns will fluctuate and its share values and returns are not guaranteed.
Money market accounts offered by banks also may be insured by the FDIC and may
offer stability of principal. U.S. Treasury securities are guaranteed as to
principal and interest by the full faith and credit of the U.S. government.
Money market mutual funds may seek to offer a fixed price per share.
The performance of a Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of the
Fund for any period in the future. The performance of a Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest, and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.
<PAGE>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The Northstar Trust's audited financial statements dated October 31, 1996
and the report of the independent accountants, Coopers & Lybrand L.L.P. with
respect to such financial statements, are hereby incorporated by reference to
the Annual Report to Shareholders of the Northstar Trust for the fiscal year
ended October 31, 1996.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: Not Applicable
(b) Exhibits
(1) Declaration of Trust(1)
(2) By-Laws(1)
(3) N/A
(4) N/A
(5)(a) Form of Investment Advisory Agreement(1)
(b) Form of Subadvisory Agreement for Northstar
International Value Fund(2)
(6) Forms of Underwriting Agreements(1)
(7) N/A
(8) Custody Agreement(2)
(9) Administrative Services Agreement(1)
(10) Opinion of Counsel(2)
(11)(a) Consent of Independent Accountants
(Ernst & Young)(2)
(b) Consent of Independent Accountants
(Coopers & Lybrand)(2)
(12) N/A
(13) N/A
(14) N/A
(15) Form of Distribution and Service Plan(1)
(16) N/A
(17) N/A
(18) Multiple Class Plan Pursuant to Rule 18f-3(1)
(1) Filed as part of PEA No. 12 and incorporated herein by reference.
(2) Filed as part of PEA No. 19 and incorporated herein by reference.
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 January 31, 1996, the Registrant had no security holders.
Item 27. Indemnification
Section 4.3 of Registrant's Declaration of Trust provides the following:
(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; and
<PAGE>
(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 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:
<PAGE>
(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 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.
<TABLE>
<CAPTION>
Position with Other Substantial
Investment Business, Profession
Name Adviser Vocation or Employment
- ----------------------------------------------------------------------------
<S> <C>
John Turner Director Chairman and CEO, ReliaStar Financial
Corp; Director of Northstar Affiliates;
Trustee and Chairman, Northstar
Affiliated Investment Companies.
<PAGE>
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
Peter Bakst Vice President- Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager, Director - High Yield Debt
Group for CS First Boston Corp.,
President of Presidio Capital
Management and Managing Director at
BT Securities Corp.
Ryan Johanson Vice President- Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager, Director of Global Market
Risk Management, and Senior Manager
of Banque Indosuez.
Jeffrey Aurigemma Vice President - Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager.
Michael Graves Vice President Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager.
Agnes Mullady Sr. Vice President Vice President & Treasurer of Northstar
and CFO Affiliates and the Northstar Affiliated
Investment Companies.
Gertrude Purus Vice President Vice President Northstar Distributors and
Operations Northstar Administrators Corp.
<PAGE>
Stephen Vondrak Vice President Vice President - Northstar Distributors, Inc.
Sales/Marketing Former Regional Marketing
Manager with Roger Engemann
and Associates from 1991-1994.
Mark Sfarra Vice President - Vice President - Northstar Distributors, Inc.
Marketing
</TABLE>
For information as to the business, profession, vocation or employment of a
substantial nature of the Subadviser, Brandes Investment Partners, L.P., and its
officers, reference is made to form ADV filed under the Investment Advisers Act
of 1940 by Brandes Investment Partners, L.P. (File No. 801-24896).
Item 29. Principal Underwriter
(a) See "Management of the Fund - The Investment Adviser and Affiliated Service
Providers" and "How to Purchase Shares" in the Prospectus and "Underwriter and
Distribution Services" in the Statement of Additional Information, both of which
are included in this Post-Effective Amendment to the Registration Statement.
Unless otherwise indicated, the principal business address for each person is
c/o Northstar, Two Pickwick Plaza, Greenwich, CT 06830.
(b) (1) (2) (3)
Name and Principal Position and Offices Position and Offices
Address with Underwriter with Registrant
- -------------------------------------------------------------------------------
John Turner Director Trustee, Chairman
20 Washington Ave. South
Minneapolis, MN
John Flittie Director None
20 Washington Ave. South
Minneapolis, MN
Mark L. Lipson Chairman & Director Trustee and President
Robert J. Adler President None
Mark Blinder Reg. Vice President None
Richard Francis Reg. Vice President None
Daniel Leonard Reg. Vice President None
Stephen O'Brien Reg. Vice President None
David Linton Reg. Vice President None
Charles Dolce Reg. Vice President None
Hyman Glasman Reg. Vice President None
<PAGE>
Scott Casselberry Reg. Vice President None
Richard Galloway 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
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 and number of
shares of each accumulation, price of each accumulation;
(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.
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.
<PAGE>
(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 Fund's registration statement.
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Greenwich and the State of Connecticut on the
1st day of May, 1997.
NORTHSTAR TRUST
/s/Mark L. Lipson
---------------------------
Mark L. Lipson, President*
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/John G. Turner Chairman/Trustee May 1, 1997
-----------------
John G. Turner*
/s/Mark L. Lipson President/Trustee May 1, 1997
-----------------
Mark L. Lipson*
/s/Paul S. Doherty Trustee May 1, 1997
------------------
Paul S. Doherty*
/s/David W. Wallace Trustee May 1, 1997
-------------------
David W. Wallace*
/s/Robert B. Goode, Jr. Trustee May 1, 1997
-----------------------
Robert B. Goode, Jr.*
/s/Walter H. May Trustee May 1, 1997
----------------
Walter H. May*
/s/Alan L. Gosule Trustee May 1, 1997
-----------------
Alan L. Gosule*
/s/David W.C. Putnam Trustee May 1, 1997
--------------------
David W. C. Putnam*
/s/John R. Smith Trustee May 1, 1997
-----------------
John R. Smith*
/s/Agnes Mullady Principal Financial May 1, 1997
---------------- and Accounting Officer
Agnes Mullady
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
- -------------------- ---------------
N/A
