<PAGE>
As filed with the Securities and Exchange Commission on March 5, 1997
Registration Nos. 33-67852; 811-7978
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form N1-A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____
Post-Effective Amendment No. 16
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 17
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, CT 06830
-----------------------------------------------------
(Name and address for agent for service)
Copies of all correspondence to:
Jeff Steele, Esq.
Dechert, Price & Rhoads
1500 K Street, N.W., Suite 500
Washington, D.C. 20005
<PAGE>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
- - -
X on March 5, 1997 pursuant to paragraph (b)
- - -
60 days after filing pursuant to paragraph (a)(1)
- - -
on [date] pursuant to paragraph (a)(1)
- - -
75 days after filing pursuant to paragraph (a)(2)
- - -
on [date] pursuant to paragraph (a)(2) of Rule 485
- - -
If appropriate, check the following box:
this post-effective amendment designates a new effective
- - - date for a previously filed post-effective amendment.
- -------------------------------------------------------------
* Registrant has registered an indefinite number of shares of beneficial
interest by its initial Registration Registration Statement pursuant to Rule
24f-2 under the Invesment Company Act of 1940, as amended, which became
effective November 5, 1993. The Registrant has filed the Notice required by Rule
24f-2 for its most recent fiscal year on or about December 23, 1996.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(a)
UNDER THE SECURITIES ACT OF 1933
PART A
COMBINED PROSPECTUS
<TABLE>
<CAPTION>
FORM N-1A PART A ITEM PROSPECTUS CAPTION
<S> <C>
1. Cover Page Cover Page
2. Synopsis What you pay to invest
3. Condensed Financial Information Cover Page; Objective; Investment
Strategy; Holdings; Risks; The Risks
of Investing in Mutual Funds; Investment
Practices; The Business of Mutual Funds;
Where to go for more Information
4. General Description of Registrant Cover Page; Objective; Investment
Strategy; Holdings; Risks; The Risks
of Investing in Mutual Funds; Investment
Practices; The Business of Mutual Funds;
Where to go for more Information
5. Management of the Fund Meet the Portfolio Managers; The Business
of Mutual Funds
6. Capital Stock and Other Securities Buying, Selling and Exchanging;
Choosing a Share Class; Opening a
NorthStar Account; Mutual Fund Earnings
and your Taxes; Where to go for more
Information
7. Purchases of Securities Being Offered Buying, Selling and Exchanging;
Choosing a Share Class; Opening a
NorthStar Account; How Dealers
are Compensated
8. Redemption or Repurchase Buying, Selling and Exchanging
9. Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
PART B
<TABLE>
<CAPTION>
FORM N-1A PART B ITEM STATEMENT OF ADDITIONAL INFORMATION
CAPTION
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information & History Cover Page; Other Information
13. Investment Objectives and Policies Cover Page; Investment Restrictions;
Investment Techniques
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal N/A
Holders of Securities
16. Investment Advisory and Other Services of Northstar; the Subadvisers
Services and the Administrator
17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices Allocation
18. Capital Stock and Other Purchases and Redemptions
Securities
19. Purchases, Redemptions and Net Asset Value; Purchases and
Redemptions
20. Tax Status Dividends, Distribution and Taxes
21. Underwriter Underwriter and Distribution Services
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C in the Registration Statement.
<PAGE>
THE NORTHSTAR FUNDS
Prospectus
March 1, 1997
(Graphic of a star appears on the right side of page)
This prospectus
contains
important
information
about investing in
Northstar
Funds.
It tells you:
(Bullet) how to choose the funds that are right for you
(Bullet) how to buy and sell shares
(Bullet) how you earn money on your investments
(Bullet) how investing in mutual funds may affect your taxes
Please read it carefully before you invest, and keep it for
future reference.
Growth Funds
NORTHSTAR Growth Fund
NORTHSTAR Growth + Value Fund
NORTHSTAR Special Fund
Income and Growth Funds
NORTHSTAR Income and Growth Fund
NORTHSTAR Balance Sheet Opportunities Fund
Income Funds
NORTHSTAR High Total Return Fund
NORTHSTAR High Yield Fund
NORTHSTAR Strategic Income Fund
NORTHSTAR Government Securities Fund
Your investment:
(Bullet) is not a bank deposit
(Bullet) is not insured or guaranteed by the
FDIC, the Federal Reserve Board or
any other governement agency
(Bullet) is affected by market
fluctuations-there is no guarantee
that you won't lose money.
Some of these funds may invest in junk bonds.
You'll find out more about how
these can affect your investment in the
section called The risks of investing
in mutual funds, that begins on page 36.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
What's inside
(Picture of a bulls eye and arrow) OBJECTIVES
(Picture of a clock) INVESTMENT
STRATEGY
(Picture of a safe) HOLDINGS
(Picture of scales) RISKS
(Picture of a coin) WHAT YOU PAY TO INVEST
(Picture of a stack of money) HOW THE
FUND HAS PERFORMED
These pages contain a description of each of our funds, including its
objective, investment strategy, types of holdings, risks and portfolio managers.
You'll also find:
What you pay to invest.A list of the fees and expenses you pay both
directly and indirectly - when you invest in the fund.
HOW THE FUND HAS PERFORMED. A chart that shows the fund's financial
performance for up to ten years, by share class.
What's inside
An introduction to the
Northstar family of funds 3
Northstar Growth Funds
Growth Fund 4
Growth + Value Fund 6
Special Fund 8
Northstar Income and Growth Funds
Income and Growth Fund 10
Balance Sheet Opportunities Fund 12
Northstar Income Funds
High Total Return Fund 14
High Yield Fund 16
Strategic Income Fund 18
Government Securities Fund 20
Meet the portfolio managers 22
Your guide to buying, selling and exchanging shares of Northstar funds 25
Mutual fund earnings and your taxes 32
The business of mutual funds 34
The risks of investing in mutual funds 36
WHERE TO GO FOR MORE INFORMATION 40
2
<PAGE>
AN INTRODUCTION TO THE
NORTHSTAR FAMILY OF FUNDS
Risk is the potential that
your investment will lose
money or not earn as much
as you hope. All mutual
funds have varying degrees
of risk, depending on the
securities they invest in.
Please read this prospectus
carefully to be sure you
understand the risks and
potential benefits associated
with each of our funds.
(Picture of a telephone)
IF YOU HAVE ANY QUESTIONS
ABOUT THE NORTHSTAR
FAMILY OF FUNDS OR ABOUT
CHOOSING SUITABLE
INVESTMENTS, PLEASE CALL
US AT 1-800-595-7827.
An introduction to the
Northstar family of funds
This prospectus has been designed to help you make informed decisions about your
investments.
We've divided our funds into three categories, and color-coded them to make it
easy to find what you're looking for.
[ ] GROWTH FUNDS APPEAR ON THE GREEN PAGES
Our Growth Funds focus on long-term growth by investing primarily in equi-
ties. They will suit you if you:
(Bullet) are investing for the long term - at least several years
(Bullet) are willing to accept higher risk in exchange for potentially
higher long-term returns.
[ ] INCOME AND GROWTH FUNDS APPEAR ON THE BLUE PAGES
Our Income and Growth Funds seek income and growth of capital in
varying combinations. They will suit you if you:
(Bullet) want both regular income and capital appreciation
(Bullet) are looking for potentially higher returns than those offered by
the income funds, but don't feel comfortable with the level of
risk associated with the growth funds.
[ ] INCOME FUNDS APPEAR ON THE RED PAGES
Northstar offers both aggressive and conservative Income Funds. Both offer
regular income, but some take higher risks to attain higher returns.
The Income Funds will suit you if you:
(Bullet) want a regular stream of income
(Bullet) want higher potential returns than money market funds
(Bullet) are willing to accept some risk.
3
<PAGE>
NORTHSTAR
Growth
Fund
Registrant
Northstar Growth Fund
Portfolio manager
Geoffrey Wadsworth
Objective
This fund seeks long-term (Picture of a bulls eye and arrow)
growth of capital by investing
primarily in domestic common
stocks.
Investment strategy
The fund invests in large and (Picture of a clock)
mid-sized companies that the
portfolio manager feels have
above average prospects for growth.
HOLDINGS
Under normal market conditions, the (Picture of safe)
fund invests at least 65% of its assets
in securities purchased on the basis of
the potential for capital appreciation.
The fund also holds preferred stocks and
convertible securities. It may invest
up to 20% of its net assets in foreign
issuers, but only 10% can be in
securities that are not listed on a
U.S. securities exchange. It may also invest
in other higher-risk securities and engage
in other investment practices. These
are described on page 36.
RISKS
Because they invest in equities, all (Picture of scales)
growth funds are affected by changes in
the stock market. This fund is also subject
to the risks associated with
investing in foreign securities. Please
refer to the section beginning on page
36, The risks of investing in mutual funds.
WHAT YOU PAY TO INVEST
There are two types of fees and expenses (Picture of a coin)
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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none (1) 5.00 (2) 1.00 (2) 4.00(2)
</TABLE>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Management fee % 0.75 0.75 0.75 0.75
12b-1 fee(3) % 0.30 1.00 1.00 0.95
Other expenses(4) % 0.45 0.45 0.45 0.30
T OTAL FUND OPERATING EXPENSES
AFTER REIMBURSEMENT % 1.50 2.20 2.20 2.00
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 62 93 125 218
Class B
with redemptions $ 74 101 141 235(5)
without redemptions $ 22 69 118 235(5)
Class C
with redemptions $ 33 69 118 253
without redemptions $ 22 69 118 253
Class T
with redemptions $ 62 85 108 220(6)
without redemptions $ 20 63 108 220(6)
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than
the maximum permitted front-end sales charge.
(4) These figures are after the adviser reimbursed its expenses. Before
reimbursement, other expenses would have been 0.51% for Class A, 0.49% for Class
B, 0.60% for Class C, and 0.34% for Class T. Total fund operating expenses would
have been 1.56% for Class A, 2.24% for Class B, 2.35% for Class C, and 2.04% for
Class T.
(5) Class B shares convert to Class A shares after year 8. This figure
uses Class A expenses for years 9 and 10.
(6) Class T shares convert to Class A shares after year 8 or on June 2,
1998, whichever is later. This figure uses Class A expenses for years 9 and 10.
4 GROWTH FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the Audited by other independent NORTHSTAR
PERFORMED fund's financial performance by accountants prior to 1995. GROWTH
(Picture of money) share class. The 1995 and 1996 FUND
figures have been audited by The fund's performance is also
Coopers & Lybrand L.L.P., reported in national newspapers
independent accountants. under these trading symbols:
GRWTHA or GRWTHT.
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
YEAR ENDED DECEMBER 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the
beginning of the period $ 15.53 17.59 15.50 17.59 15.50 17.59
Net investment income
(loss) $ 0.02 0.08 (0.06) 0.06 (0.05) 0.04
Net realized and
unrealized gain on
investments $ 3.18 1.95 3.13 1.92 3.12 1.92
Total from investment
operations $ 3.20 2.03 3.07 1.98 3.07 1.96
Dividends from net
investment income $ - (0.10) - (0.08) - (0.06)
Dividends from net
realized gain on
investments sold $ (0.81) (3.99) (0.81) (3.99) (0.81) (3.99)
Total distributions $ (0.81) (4.09) (0.81) (4.07) (0.81) (4.05)
Net asset value at the end
of the period $ 17.92 15.53 17.76 15.50 17.76 15.50
TOTAL INVESTMENT RETURN(2) % 20.54 11.55 19.74 11.27 19.74 11.17
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of
the period ($000s) $ 4,750 1,355 4,444 1,987 365 69
Ratio of expenses to
average net assets % 1.50 1.42 (3) 2.20 2.07 (3) 220 2.11 (3)
Ratio of expense
reimbursement to average
net assets % 0.06 - 0.04 - 0.15 -
Ratio of net investment
income (loss) to average
net assets % 0.11 0.63 (3) (0.55) 0.06 (3) (0.57) 0.02 (3)
Average commissions per
share $ 0.0593 - 0.0593 - 0.0593 -
Portfolio turnover rate % 62 134 62 134 62 134
CLASS T
YEAR ENDED DECEMBER 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
OPERATING PERFORMANCE
Net asset value at the
beginning of the period $ 15.53 15.75 17.33 16.36 16.37 12.49 13.85 11.96 10.47 10.54
Net investment income
(loss) $ (0.06) 0.07 0.08 0.02 0.02 0.09 0.10 0.20 0.16 0.09
Net realized and
unrealized gain (loss) on
investments $ 3.16 3.77 (1.41) 1.67 1.30 4.62 (0.83) 2.66 1.58 (0.07)
Total from investment
operations $ 3.10 3.84 (1.33) 1.69 1.32 4.71 (0.73) 2.86 1.74 0.02
Dividends from net
investment income $ - (0.07) (0.08) (0.04) (0.02) (0.08) (0.10) (0.20) (0.17) (0.08)
Dividends from net
realized gain on
investments sold $ (0.81) (3.99) (0.15) (0.67) (1.31) (0.75) (0.51) (0.76) (0.08) -
Distributions from capital $ - - (0.02) (0.01) - - (0.02) (0.01) - (0.01)
Total distributions $ (0.81) (4.06) (0.25) (0.72) (1.33) (0.83) (0.63) (0.97) (0.25) (0.09)
Net asset value at the end
of the period $ 17.82 15.53 15.75 17.33 16.36 16.37 12.49 13.85 11.96 10.47
TOTAL INVESTMENT RETURN (2) % 19.90 24.40 (7.66) 10.36 8.05 38.10 (5.24) 24.25 16.70 0.11
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of
the period ($000s) $ 70,406 76,343 76,391 80,759 56,759 40,884 24,927 29,842 25,359 27,493
Ratio of expenses to
average net assets % 2.00 2.00 2.00 2.04 2.15 2.25 2.33 2.33 2.46 2.29
Ratio of expense
reimbursement to average
net assets % 0.04 - - - - - - - - -
Ratio of net investment
income (loss) to average
net assets % (3.05) 0.37 0.49 0.13 0.09 0.66 0.80 1.39 1.40 0.83
Average commissions per
share $ 0.0593 - - - - - - - - -
Portfolio turnover rate % 62 134 54 42 47 64 54 75 59 55
</TABLE>
(1) Share classes A, B & C commenced
operations on June 5, 1995.
(2) Assumes dividends have been rein-
vested and does not reflect the
effect of sales charges. Unaudited
prior to 1992.
(3) Annualized.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
GROWTH FUNDS 5
<PAGE>
NORTHSTAR
GROWTH +
VALUE FUND
REGISTRANT
Northstar Trust
PORTFOLIO MANAGER
Louis Navellier
OBJECTIVE
This fund seeks capital appreciation (Picture of a bulls eye and arrow)
by investing in a diversified portfolio
of equity securities.
INVESTMENT STRATEGY
The fund invests primarily in companies (Picture of a clock)
the portfolio manager identifies as
either growth or value through quantitative analysis.
Growth companies have above average earnings
or sales growth, and higher price to earnings
ratios. Value companies are temporarily
undervalued or out of favor, and tend to have
lower price to book ratios, higher earnings
or dividend yields and higher returns on equity.
The percentage of fund assets allocated
to the two different kinds of companies
varies depending on the portfolio manager's
assessment of economic conditions and investment
opportunities.
HOLDINGS
The fund invests in common stocks, preferred (Picture of a safe)
stocks, convertible securities, warrants and other
stock purchase rights, private placements and other
restricted equity securities, equity interests in
trusts, limited partnerships and joint ventures
and interests in real estate investment
trusts. It may hold up to 20% of its assets
in foreign companies as American Depository
Receipts. It may also invest in other
higher-risk securities and engage in other
investment practices. These are described on page 36.
RISKS
Because they invest in equities, all (Picture of a scales)
growth funds are affected by changes in
the stock market. Please refer to the section
beginning on page 36, 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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C
<S> <C> <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>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C>
Management fee % 1.00 1.00 1.00
12b-1 fee(3) % 0.30 1.00 1.00
Other expenses(4) % 0.55 0.55 0.55
TOTAL FUND OPERATING EXPENSES
AFTER REIMBURSEMENT % 1.85 2.55 2.55
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 65 103 143 254
Class B
with redemptions $ 77 112 158 271(5)
without redemptions $ 26 79 136 271(5)
Class C
with redemptions $ 36 79 136 289
without redemptions $ 26 79 136 289
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) These figures are after the adviser reimbursed its expenses. Before
reimbursement, other expenses would have been 0.03% for Class B and 0.05% for
Class C. Total fund operating expenses would have been 2.58% for Class B and
2.60% for Class C.
(5) Class B shares convert to Class A shares after year 8. This figure
uses Class A expenses for years 9 and 10.
6 GROWTH FUNDS
<PAGE>
HOW THE FUND HAS The following chart shows the
PERFORMED fund's financial performance by NORTHSTAR
(Picture of money) share class. These figures are GROWTH +
unaudited. VALUE FUND
<TABLE>
<CAPTION>
THREE MONTHS ENDED JANUARY 31, 1997 CLASS A CLASS B CLASS C
<S> <C> <C> <C>
OPERATING PERFORMANCE (1)
Net asset value at the beginning of the period $ 10.00 10.00 10.00
Net investment income $ - - -
Net realized and unrealized gain (loss) on investments $ (0.03) (0.04) (0.04)
Total from investment operations $ (0.03) (0.04) (0.04)
Dividends from net investment income $ - - -
Dividends from net realized gain on investments sold $ - - -
Distributions from capital $ - - -
Total distributions $ - - -
Net asset value at the end of the period $ 9.97 9.96 9.96
TOTAL INVESTMENT RETURN(2) % (0.30) (0.40) (0.40)
RATIOS AND SUPPLEMENTAL DATA (1)
Net assets at the end of the period ($000s) $ 5,799 11,011 2,871
Ratio of expenses to average net assets % 1.82 (3) 2.55 (3) 2.55 (3)
Ratio of expense reimbursement to average net assets % - 0.03 (3) 0.05 (3)
Ratio of net investment income (loss) to average net assets % (0.37) (3) (1.14) (3) (1.16) (3)
Average commissions per share $ 0.0334 0.0334 0.0334
Portfolio turnover rate % 3 3 3
</TABLE>
(1) Unaudited.
(2) Assumes dividends have been rein-
vested and does not reflect the
effect of sales charges.
(3) Annualized.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
GROWTH FUNDS 7
<PAGE>
NORTHSTAR
SPECIAL
FUND
REGISTRANT
Northstar Special Fund
PORTFOLIO MANAGER
Louis Navellier
OBJECTIVE
This fund seeks (Picture of a bulls eye and arrow)
capital appreciation by
investing primarily in a
diversified portfolio of
domestic equity
securities selected on
the basis of their
potential for growth.
INVESTMENT STRATEGY
The fund focuses on smaller, (Picture of a clock)
lesser-known companies,
including emerging growth
companies.
HOLDINGS
The fund holds (Picture of a safe)
common stocks, preferr
convertible securities, warrants
and other stock purchase rights,
private placements and other
estricted equity securities, equity
ests in trusts, limited partner-
ships and joint ventures and inter-
ests in real estate investment
trusts. It may invest up to 20% of
its net assets in foreign issuers,
but only 10% can be in securities
that are not listed on a U.S. secu-
rities exchange. It may also invest
in other higher-risk securities and
engage in other investment prac-
tices. These are described on
page 36.
RISKS
Because the (Picture of a scale)
invest in equities, all growth
funds are affected by changes in
the stock market. This fund is also
subject to the risks associated
with investing in smaller compa-
nies, emerging growth companies
and foreign securities. Please
refer to the section beginning on
page 36, The risks of investing in
mutual funds.
WHAT YOU PAY
TO INVEST
There are two (Picture of a coin)
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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none (1) 5.00 (2) 1.00 (2) 4.00(2)
</TABLE>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Management fee % 0.75 0.75 0.75 0.75
12b-1 fee(3) % 0.30 1.00 1.00 0.95
Other expenses (4) % 0.41 0.42 0.45 0.37
TOTAL FUND OPERATING EXPENSES
AFTER REIMBURSEMENT % 1.46 2.17 2.20 2.07
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 62 91 123 214
Class B
with redemptions $ 73 101 139 232(5)
without redemptions $ 22 68 116 232(5)
Class C
with redemptions $ 33 69 118 253
without redemptions $ 22 69 118 253
Class T
with redemptions $ 62 87 111 224(6)
without redemptions $ 21 65 111 224(6)
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than
the maximum permitted front-end sales charge.
(4) These figures are after the adviser reimbursed its expenses. Before
reimbursement, other expenses would have been 0.42% for Class A, 0.43% for Class
B, 0.46% for Class C and 0.41% for Class T. Total fund operating expenses would
have been 1.47% for Class A, 2.18% for Class B, 2.21% for Class C and 2.11% for
Class T
(5) Class B shares convert to Class A shares after year 8. This figure
uses Class A expenses for years 9 and 10.
(6) Class T shares convert to Class A shares after year 8 or on June 2,
1998, whichever is later. This figure uses Class A expenses for years 9 and 10.
8 GROWTH FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the The fund's performance is also NORTHSTAR
PERFORMED fund's financial performance by reported in national newspapers Special
(Picture of money) share class. The 1995 and 1996 fig- under these trading symbols: Fund
ures have been audited by Coopers SPECLA, SPECLB, SPECLC or
& Lybrand L.L.P., independent SPECLT.
accountants. Audited by other inde-
pendent accountants prior to 1995.
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
YEAR ENDED DECEMBER 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the
beginning of the period $ 20.92 19.56 20.84 19.56 20.84 19.56
Net investment (loss) $ (0.04) (0.09) (0.12) (0.12) (0.13) (0.15)
Net realized and
unrealized gain on
investments $ 3.84 2.48 3.74 2.43 3.75 2.46
T otal fr om investment
operations $ 3.80 2.39 3.62 2.31 3.62 2.31
Dividends from net
realized gain on
investments sold $ - (1.03) - (1.03) - (1.03)
T otal distributions $ - (1.03) - (1.03) - (1.03)
Net asset value at the
end of the period $ 24.72 20.92 24.46 20.84 24.46 20.84
T OTAL INVESTMENT
RETURN(2) % 18.16 12.20 17.37 11.79 17.37 11.79
RATIOS AND SUPPLEMENTAL
DATA
Net assets at the end of
the period ($000s) $ 65,660 2,335 126,859 1,491 37,342 62
Ratio of expenses to
average net assets % 1.46 1.50(3) 2.17 2.20(3) 2.20 2.20 (3)
Ratio of expense
reimbursement to average
net assets % 0.01 - 0.01 0.01(3) 0.01 0.03 (3)
Ratio of net investment
income (loss) to average
net assets % (0.30) (0.91)(3) (1.01) (1.64)(3) (1.03) (1.60) (3)
Average commissions per
share $ 0.0392 - 0.0392 - 0.0392 -
Portfolio turnover rate % 140 71 140 71 140 71
</TABLE>
<TABLE>
<CAPTION>
CLASS T
Y EAR ENDED DECEMBER 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at the
beginning of the period $ 20.84 19.64 20.79 17.40 15.74 10.64 11.67 9.55 7.90 8.92
Net investment (loss) $ (0.21) (0.34) (0.25) (0.32) (0.33) (0.21) (0.20) (0.06) (0.13) (0.14)
Net r ealized and
unrealized gain (loss) on
investments $ 3.85 2.57 (0.76) 3.83 2.61 6.24 (0.83) 2.18 1.78 (0.88)
T otal fr om investment
operations $ 3.64 2.23 (1.01) 3.51 2.28 6.03 (1.03) 2.12 1.65 (1.02)
Dividends from net
realized gain on
investments sold $ - (1.03) (0.14) (0.12) (0.62) (0.93) - - - -
T otal distributions $ - (1.03) (0.14) (0.12) (0.62) (0.93) - - - -
Net asset value at the
end of the period $ 24.48 20.84 19.64 20.79 17.40 15.74 10.64 11.67 9.55 7.90
T OTAL INVESTMENT
RETURN(2) % 17.47 11.34 (4.86) 20.16 14.54 57.27 (8.83) 22.20 20.89 (11.43)
RATIOS AND SUPPLEMENTAL
DATA
Net assets at the end of
the period ($000s) $ 35,670 33,557 38,848 28,838 11,336 5,480 3,024 3,958 3,330 3,078
Ratio of expenses to
average net assets % 2.07 2.16 2.16 2.34 2.84 2.95 2.95 2.95 2.96 2.94
Ratio of expense
reimbursement to average
net assets % 0.04 - - - - 0.74 2.03 1.94 3.05 1.58
Ratio of net investment
income (loss) to average
net assets % (0.89) (1.50) (1.25) (1.66) (2.12) (1.57) (0.97) (0.44) (1.06) (1.22)
Average commissions per
share $ 0.0392 - - - - - - - - -
Portfolio turnover rate % 140 71 39 35 40 85 72 85 40 57
</TABLE>
(1) Share classes A, B & C commenced
operations on June 5, 1995.
(2) Assumes dividends have been
reinvested and does not reflect
the effect of sales charges.
Unaudited prior to 1992.
(3) Annualized.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
GROWTH FUNDS 9
<PAGE>
NORTHSTAR
INCOME
AND GROWTH
FUND
REGISTRANT
Northstar Trust
PORTFOLIO MANAGERS
Geoffrey Wadsworth, Jack Fisher
OBJECTIVE
This fund seeks (Picture of a bulls eye and arrow)
current income
balanced with capital
appreciation primarily
by investing in dividend
paying equity securities,
convertible securities,
and investment grade
debt securities.
INVESTMENT
STRATEGY
This fund invests in a mix of equity (Picture of a clock)
and investment grade debt securi-
ties designed to provide both cur-
rent income and long-term growth
of capital.
HOLDINGS
Under normal mar- (Picture of a safe)
ket conditions, the fund invests at
least 65% of its total assets in
income-producing securities. It
generally holds no more than 30%
of its assets in convertible securi-
ties. It may invest up to 20% of its
net assets in foreign issuers, but
only 10% can be in securities that
are not listed on a U.S. securities
exchange. It may also invest in
other higher-risk securities and
engage in other investment
practices. These are described on
page 36.
RISKS
All income and (Picture of a scale)
growth funds are affected by
changes in interest rates. This
fund is also subject to the risks
associated with investing in for-
eign securities. Please refer to
the section beginning on page 36,
The risks of investing in mutual
funds.
WHAT YOU PAY
TO INVEST (Picture of a coin)
There are two
types of fees and
expenses when you
invest in mutual funds:
fees, including sales
charges, you pay dir
when you buy or sell
shares, and operating
by the fund.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C
<S> <C> <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>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C>
Management fee (3) % 0.75 0.75 0.75
12b-1 fee(4) % 0.30 1.00 1.00
Other expenses % 0.47 0.51 0.45
TOTAL FUND OPERATING EXPENSES % 1.52 2.26 2.20
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 62 93 126 220
Class B
with redemptions $ 74 103 144 241(5)
without redemptions $ 23 71 121 241(5)
Class C
with redemptions $ 33 71 121 260
without redemptions $ 23 71 121 260
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) This is the maximum management fee. The actual fee charged reduces
with asset size: 0.75% on the first $250 million, 0.70% on the next $250
million, 0.65% on the next $250 million, 0.60% on the next $250 million and
0.55% on assets over $1 billion.
(4) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(5) Class B shares convert to Class A shares after year 8. This figure
uses Class A expenses for years 9 and 10.
10 INCOME AND GROWTH FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the The fund's performance is also
PERFORMED fund's financial performance by reported in national newspapers NORTHSTAR
(Picture of money) share class. These figures have under these trading symbols: INCOME
been audited by Coopers & INCGRA, INCGRB or INCGRC. AND GROWTH
Lybrand L.L.P., independent AND GROWTH FUND
accountants.
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
YEAR ENDED OCTOBER 31, 1996 1995 1994 (1) 1996 1995 1994 (1) 1996 1995 1994 (1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 10.86 10.00 10.00 10.84 9.99 10.64 10.83 9.99 10.37
Net investment income $ 0.32 0.35 0.30 0.24 0.27 0.20 0.24 0.27 0.20
Net realized and unrealized gain (loss) on investments $ 1.29 0.84 (0.05) 1.28 0.85 (0.65) 1.28 0.85 (0.38)
Total from investment operations $ 1.61 1.19 0.25 1.52 1.12 (0.45) 1.52 1.12 (0.18)
Dividends from net investment income $(0.31) (0.33) (0.25) (0.23) (0.27) (0.20) (0.23) (0.28) (0.20)
Total distributions $(0.31) (0.33) (0.25) (0.23) (0.27) (0.20) (0.23) (0.28) (0.20)
Net asset value at the end of the period $12.16 10.86 10.00 12.13 10.84 9.99 12.12 10.83 9.99
TOTAL INVESTMENT RETURN (2) %14.48 13.19 2.48 13.60 12.31 (4.20) 13.68 12.33 (1.75)
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $85,250 76,031 72,223 71,123 60,347 37,767 60,458 53,661 4,823
Ratio of expenses to average net assets % 1.52 1.51 1.50(3) 2.26 2.23 2.20(3) 2.20 2.22 2.20(3)
Ratio of expense reimbursement to average net assets % - - 0.06(3) - - 0.16(3) - - 0.47(3)
Ratio of net investment income to average net assets % 2.78 3.39 3.73(3) 2.04 2.66 3.00(3) 2.10 2.67 2.87(3)
Average commissions per share $0.0600 - - 0.0600 - - 0.0600 - -
Portfolio turnover rate % 147 91 26 147 91 26 147 91 26
</TABLE>
(1) Class A commenced operations on
November 8, 1993. Class B com-
menced operations on February 9,
1994. Class C commenced opera-
tions on March 31, 1994.
(2) Assumes dividends have been rein
vested and does not reflect the
effect of sales charges.
(3) Annualized.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
INCOME AND GROWTH FUNDS 11
<PAGE>
NORTHSTAR
BALANCE SHEET
OPPORTUNITIES
FUND
REGISTRANT
Northstar Balance Sheet
Opportunities Fund
PORTFOLIO MANAGERS
Thomas Ole Dial, Peter Bakst
OBJECTIVE
This fund seeks (Picture of a bulls eye and arrow)
income, with a
secondary objective of
capital appreciation,
primarily by investing in
domestic debt and
equity securities.
INVESTMENT
STRATEGY
The portfolio managers review var- (Picture of a clock)
ious factors relating to a potential
issuer, especially its financial
statements, to determine which
type of security-debt or equity-
offers the best potential for a high
current income combined with the
potential for capital growth.
HOLDINGS
Under normal mar- (Picture of a safe)
ket conditions, the fund invests at
least 65% of its assets in income-
producing securities. It may hold
up to 50% of its assets in debt
securities rated as low as B by
Moody's or S&P (junk bonds).
Equity securities include common
stocks, preferred stocks, convert-
ible securities and warrants and
other stock purchase rights.
Income producing securities have
varying maturities and pay fixed,
floating or adjustable interest
rates. The fund may also hold pay-
in-kind securities and discount
obligations, including zero coupon
securities. The fund may invest up
to 20% of its net assets in foreign
issuers, but only 10% of its net
assets can be in securities that are
not listed on a U.S. securities
exchange. It may also invest in
other higher-risk securities and
engage in other investment
practices. These are described on
page 36.
RISKS
All income and (Picture of a scale)
growth funds are affected by
changes in interest rates. This
fund is also subject to the risks
associated with investing in junk
bonds and foreign securities.
Please refer to the section begin-
ning on page 36, The risks of
investing in mutual funds.
WHAT YOU PAY
TO INVEST
There are two (Picture of a coin)
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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none (1) 5.00 (2) 1.00 (2) 4.00(3)
</TABLE>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Management fee % 0.65 0.65 0.65 0.65
12b-1 fee(3) % 0.30 1.00 1.00 0.75
Other expenses(4) % 0.45 0.45 0.45 0.29
TOTAL FUND OPERATING EXPENSES
AFTER REIMBURSEMENT % 1.40 2.10 2.10 1.69
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 61 90 120 207
Class B
with redemptions $ 73 98 136 225(5)
without redemptions $ 21 66 113 225(5)
Class C
with r edemptions $ 32 66 113 243
without redemptions $ 21 66 113 243
Class T
with redemptions $ 59 75 92 192(6)
without redemptions $ 17 53 92 192(6)
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than
the maximum permitted front-end sales charge.
(4) These figures are after the adviser reimbursed its expenses. Before
reimbursement, other expenses would have been 0.54% for Class A, 0.52% for Class
B, 0.55% for Class C and 0.35% for Class T. Total fund operating expenses would
have been 1.49% for Class A, 2.17% for Class B, 2.20% for Class C and 1.75% for
Class T.
(5) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10.
(6) Class T shares convert to Class A shares after year 8 or on June 2,
1998, whichever is later. This figure uses Class A expenses for years 9 and 10.
12 INCOME AND GROWTH FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the other independent accountants NORTHSTAR
PERFORMED fund's financial performance by prior to 1995. Balances Sheet
(Picture of Money) share class. The 1995 and 1996 Opportunities
figures have been audited by The fund's performance is also Fund
Coopers & Lybrand L.L.P., indepen- reported in national newspapers
dent accountants. Audited by under this trading symbol: BASHOPT
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class C
Year ended December 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 12.53 12.77 12.51 12.77 12.52 12.77
Net investment income $ 0.56 0.43 0.50 0.35 0.49 0.38
Net realized and unrealized gain on
investments $ 0.74 1.06 0.71 1.09 0.70 1.07
T otal fr om investment operations $ 1.30 1.49 1.21 1.44 1.19 1.45
Dividends from net investment income $(0.57) (0.48) (0.50) (0.45) (0.48) (0.45)
Dividends from net realized gain on
investments sold $(1.48) (1.25) (1.48) (1.25) (1.48) (1.25)
T otal distributions $(2.05) (1.73) (1.98) (1.70) (1.96) (1.70)
Net asset value at the end of the period $ 11.78 12.53 11.74 12.51 11.75 12.52
T OTAL INVESTMENT RETURN (2) % 10.54 11.95 9.76 11.56 9.72 11.49
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $ 1,100 797 3,765 1,759 372 231
Ratio of expenses to average net assets % 1.40 1.27(3) 2.10 1.95(3) 2.10 1.91
Ratio of expense reimbursement to average net
assets % 0.09 - 0.07 - 0.10 -
Ratio of net investment income to average net
assets % 4.30 4.99(3) 3.64 4.38(3) 3.61 4.49
Average commissions per share $0.0690 - 0.0690 - 0.0690 -
Portfolio turnover rate % 107 131 107 131 107 131
CLASS T
YEAR ENDED DECEMBER 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 12.54 11.54 12.94 12.05 11.66 10.13 10.71 9.71 9.11 10.39
Net investment income $ 0.53 0.57 0.57 0.49 0.55 0.57 0.61 0.68 0.62 0.56
Net realized and unrealized gain (loss) on
investments $ 0.73 2.27 (1.25) 1.20 0.36 1.53 (0.54) 1.00 0.58 (1.04)
Total from investment operations $ 1.26 2.84 (0.68) 1.69 0.91 2.10 0.07 1.68 1.20 (0.48)
Dividends from net investment income $ (0.53) (0.59) (0.54) (0.49) (0.52) (0.57) (0.63) (0.68) (0.60) (0.57)
Dividends from net realized gain on
investments sold $ (1.48) (1.25) (0.16) (0.31) - - - - - (0.22)
Distributions from capital $ - - (0.02) - - - (0.02) - - (0.01)
Total distributions $ (2.10) (1.84) (0.72) (0.80) (0.52) (0.57) (0.65) (0.68) (0.60) (0.80)
Net asset value at the end of the period $ 11.79 12.54 11.54 12.94 12.05 11.66 10.13 10.71 9.71 9.11
TOTAL INVESTMENT RETURN (2) % 10.18 25.11 (5.33) 14.08 8.06 21.17 0.78 17.70 13.39 (5.35)
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $59,490 72,472 73,764 80,841 56,823 49,367 44,750 58,006 57,425 58,772
Ratio of expenses to average net assets % 1.69 1.68 1.69 1.77 2.02 2.06 2.10 2.04 2.10 1.98
Ratio of expense reimbursement to average net
assets % 0.06 - - - - - - - - -
Ratio of net investment income to average net
assets % 3.99 4.44 4.36 3.99 4.73 5.21 5.73 6.38 6.30 5.70
Average commissions per share $0.0690 - - - - - - - - -
Portfolio turnover rate % 107 131 59 38 59 77 57 56 25 46
</TABLE>
(1) Share classes A, B & C commenced
operations on June 5, 1995.
(2) Assumes dividends have been rein-
vested and does not reflect the
effect of sales charges. Unaudited
prior to 1992.
(3) Annualized.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
INCOME AND GROWTH FUNDS 13
<PAGE>
NORTHSTAR
HIGH TOTAL
RETURN
FUND
REGISTRANT
Northstar Trust
PORTFOLIO MANAGER
Thomas Ole Dial
OBJECTIVE (Picture of a bulls eye and arrow)
This fund seeks
high income and
capital appreciation.
INVESTMENT
STRATEGY (Picture of a clock)
The fund invests primarily in high-
er-yielding, lower-rated bonds
(junk bonds) to achieve high cur-
rent income with the potential for
capital growth.
HOLDINGS
Under normal mar- (Picture of a safe)
ket conditions, the fund invests at
least 65% of its total assets in
higher-yielding, lower-rated U.S.
dollar-denominated debt securities
of U.S. and foreign issuers. It may
also invest up to 35% of its total
assets in securities denominated in
foreign currencies. No more than
50% of its assets can be in securi-
ties of foreign issuers, including
35% in emerging market debt.
Most of the debt securities the
fund invests in are lower rated and
considered speculative, including
bonds in the lowest rating cate-
gories and unrated bonds. It can
invest up to 10%, and can hold up
to 25% of its assets in securities
rated below Caa by Moody's or
CCC by S&P. It also holds debt
securities that pay fixed, floating or
adjustable interest rates and may
hold pay-in-kind securities and dis-
count obligations, including zero
coupon securities. The fund may
also hold common stock, preferred
stock, convertible securities and
rights and warrants attached to
debt instruments. It may also
invest in other higher-risk securi-
ties and engage in other invest-
ment practices. These are
described on page 36.
RISKS (Picture of a scale)
All income funds
are affected by changes in interest
rates. This fund is also subject to
the risks associated with investing
in lower rated bonds that are
speculative in nature and foreign
securities. Please refer to the sec-
tion beginning on page 36, The
risks of investing in mutual funds.
WHAT YOU PAY
TO INVEST (Picture of a coin)
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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C
<S> <C> <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>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C>
Management fee(3) % 0.75 0.75 0.75
12b-1 fee(4) % 0.30 1.00 1.00
Other expenses % 0.47 0.48 0.48
TOTAL FUND OPERATING EXPENSES % 1.52 2.23 2.23
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 62 93 126 220
Class B
with redemptions $ 74 102 142 238(5)
without redemptions $ 23 70 119 238(5)
Class C
with redemptions $ 33 70 119 256
without redemptions $ 23 70 119 256
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) This is the maximum management fee. The actual fee charged reduces
with asset size: 0.75% on the first $250 million, 0.70% on the next $250
million, 0.65% on the next $250 million, 0.60% on the next $250 million and
0.55% on assets over $1 billion.
(4) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(5) Class B shares convert to Class A shares after year 8. This figure
uses Class A expenses for years 9 and 10.
14 INCOME FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the The fund's performance is also NORTHSTAR
PERFORMED fund's financial performance by reported in national newspapers High Total
(Picture of Money) share class. These figures have under these trading symbols: Return
been audited by Coopers & HITRA, HITRB or HITRC. Fund
Lybrand L.L.P., independent
accountants.
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
YEAR ENDED OCTOBER 31, 1996 1995 1994(1) 1996 1995 1994(1) 1996 1995 1994(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 4.48 4.41 5.00 4.47 4.41 5.20 4.49 4.41 5.06
Net investment income $ 0.46 0.48 0.41 0.43 0.45 0.33 0.43 0.44 0.26
Net realized and unrealized gain on investments $ 0.32 0.07 (0.60) 0.32 0.06 (0.80) 0.32 0.09 (0.65)
Total from investment operations $ 0.78 0.55 (0.19) 0.75 0.51 (0.47) 0.75 0.53 (0.39)
Dividends from net investment income $ (0.48) (0.48) (0.40) (0.45) (0.45) (0.32) (0.45) (0.45) (0.26)
Total distributions $ (0.48) (0.48) (0.40) (0.45) (0.45) (0.32) (0.45) (0.45) (0.26)
Net asset value at the end of the period $ 4.78 4.48 4.41 4.77 4.47 4.41 4.79 4.49 4.41
TOTAL INVESTMENT RETURN (2) % 18.14 13.02 (4.11) 17.08 11.97 (9.30) 17.28 12.44 (7.21)
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $167,698 88,552 50,797 346,919 96,362 25,880 54,382 11,011 2,330
Ratio of expenses to average net assets % 1.52 1.55 1.50(3) 2.23 2.25 2.20(3) 2.23 2.27 2.20(3)
Ratio of expense reimbursement to average
net assets % - - 0.11(3) - - 0.20(3) - - 0.99(3)
Ratio of net investment income to average
net assets % 9.86 10.90 10.09(3) 9.14 10.20 9.72(3) 9.14 10.18 9.46(3)
Portfolio turnover rate % 158 145 163 158 145 163 158 145 163
</TABLE>
(1) Class A commenced operations on
November 8, 1993. Class B com-
menced operations on February 9,
1994. Class C commenced opera-
tions on March 31, 1994.
(2) Assumes dividends have been rein-
vested and does not reflect the
effect of sales charges.
(3) Annualized.
If you are a new investor with Northstar, please note that you can only
invest in this fund until April 29, 1997. Starting April 30, 1997, only
investors who already own shares of the Northstar High Total Return
Fund will be able to buy, sell or exchange shares of the fund.
The trustees of the fund have elected to close the fund to new
investors to prevent the fund's performance from being adversly
affected by a large influx of assets, and to protect the interests of
existing fund shareholders.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
INCOME FUNDS 15
<PAGE>
NORTHSTAR
HIGH YIELD
FUND
REGISTRANT
Northstar High Yield Fund
PORTFOLIO MANAGERS
Peter Bakst, Jeffrey Aurigemma
OBJECTIVE (Picture of a bulls eye and arrow)
This fund seeks
high current income by
investing primarily in long-
term and intermediate-term
fixed income securities,
with emphasis on high
yield corporate debt
instruments of domestic
and foreign issuers.
INVESTMENT
STRATEGY (Picture of a clock)
The fund invests mostly in high-
yield bonds (junk bonds) to acheive
high current income.
HOLDINGS
Under normal mar- (Picture of a safe)
ket conditions, this fund invests at
least 65% of its total assets in
high yield or junk bonds rated
below investment grade. It can
hold up to 100% of its assets in
debt securities rated as low as Ca
by Moody's or CC by S&P or in
securities that aren't rated but
Northstar considers to be of equiv-
alent quality, and up to 1% of its
assets in bonds in the lowest rat-
ing categories. It may invest up to
35% of its net assets in foreign
issuers, but only 10% can be in
securities that are not listed on a
U.S. securities exchange. The fund
may also hold up to 25% of its
assets in preferred stocks, convert-
ible securities and rights and war-
rants associated with debt
instruments. It may also invest in
other higher-risk securities and
engage in other investment prac-
tices. These are described on
page 36.
RISKS
All income funds (Picture of a scale)
are affected by changes in interest
rates. This fund is also subject to
the risks associated with investing
in lower rated bonds that are
speculative in nature, and foreign
securities. Please refer to the sec-
tion beginning on page 36, The
risks of investing in mutual funds.
WHAT YOU PAY
TO INVEST (Picture of a coin)
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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none (1) 5.00 (2) 1.00 (2) 4.00(2)
</TABLE>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Management fee % 0.45 0.45 0.45 0.45
12b-1 fee(3) % 0.30 1.00 1.00 0.65(4)
Other expenses % 0.36 0.36 0.37 0.21
TOTAL FUND OPERATING EXPENSES % 1.11 1.81 1.82 1.31
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 58 81 106 176
Class B
with redemptions $ 70 90 121 194(5)
without redemptions $ 18 57 98 194(5)
Class C
with redemptions $ 29 57 99 214
without redemptions $ 18 57 99 214
Class T
with redemptions $ 55 64 72 152(6)
without redemptions $ 13 42 72 152(6)
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) May be increased up to 0.95%.
(5) Class B shares convert to Class A shares after year 8. This
figure uses Class A expenses for years 9 and 10.
(6) Class T shares convert to Class A shares after year 8 or on June 2,
1998, whichever is later. This figure uses Class A expenses for years 9 and 10.
16 INCOME FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the other independent accountants NORTHSTAR
PERFORMED fund's financial performance by prior to 1995. High Yield
(Picture of money) share class. The 1995 and 1996 Fund
figures have been audited by The fund's performance is also
Coopers & Lybrand L.L.P., indepen- reported in national newspapers FUND
dent accountants. Audited by under these trading symbols:
HIYLDB or HIYLDT.
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
YEAR ENDED DECEMBER 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 8.56 8.68 8.57 8.68 8.57 8.68
Net investment income $ 0.76 0.48 0.71 0.44 0.72 0.44
Net realized and unrealized gain (loss) on investments $ 0.44 (0.10) 0.43 (0.09) 0.42 (0.09)
Total from investment operations $ 1.20 0.38 1.14 0.35 1.14 0.35
Dividends from net investment income $ (0.75) (0.50) (0.69) (0.46) (0.69) (0.46)
Distributions from capital $ (0.07) - (0.07) - (0.07) -
Total distributions $ (0.82) (0.50) (0.76) (0.46) (0.76) (0.46)
Net asset value at the end of the period $ 8.94 8.56 8.95 8.57 8.95 8.57
TOTAL INVESTMENT RETURN(2) % 14.74 4.48 13.94 4.17 13.93 4.17
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $13,146 7,466 79,199 29,063 14,275 3,410
Ratio of expenses to average net assets % 1.11 1.02(3) 1.81 1.71(3) 1.82 1.72(3)
Ratio of expense reimbursement to average net assets % - - - - - -
Ratio of net investment income to average net assets % 8.60 9.83(3) 7.88 9.18(3) 7.85 9.29(3)
Average commissions per share $0.0777 - 0.0777 - 0.0777 -
Portfolio turnover rate % 128 103 128 103 128 103
</TABLE>
<TABLE>
<CAPTION>
CLASS T
YEAR ENDED DECEMBER 31, 1996 1995 1994 1993 1992 1991 1990 1989(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 8.56 8.29 9.31 9.09 7.94 6.27 8.55 10.00
Net investment income $ 0.73 0.84 0.81 0.85 0.92 1.08 1.12 0.60
Net realized and unrealized gain (loss)
on investments $ 0.45 0.26 (0.99) 0.80 1.19 1.67 (2.30) (1.45)
Total from investment operations $ 1.18 1.10 (0.18) 1.65 2.11 2.75 (1.18) (0.85)
Dividends from net investment income $ (0.73) (0.83) (0.83) (0.83) (0.94) (1.08) (1.10) (0.60)
Dividends from net realized gain $ - - (0.01) (0.60) (0.02) - - -
Distributions from capital $ (0.07) - - - - - - -
Total distributions $ (0.80) (0.83) (0.84) (1.43) (0.96) (1.08) (1.10) (0.60)
Net asset value at the end of the period $ 8.94 8.56 8.29 9.31 9.09 7.94 6.27 8.55
TOTAL INVESTMENT RETURN(2) % 14.49 13.71 (2.18) 18.89 27.57 46.49 (14.59) (8.81)
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $124,431 139,711 136,426 125,095 64,063 25,651 11,342 11,045
Ratio of expenses to average net assets % 1.31 1.33 1.34 1.40 1.50 1.50 1.44 1.35(3)
Ratio of expense reimbursement to average net assets % - - - - 0.05 0.46 0.81 1.30(3)
Ratio of net investment income (loss) to average
net assets % 8.43 9.69 9.08 8.84 10.30 14.84 15.15 11.44(3)
Average commissions per share $ 0.0777 - - - - - - -
Portfolio turnover rate % 128 103 86 176 122 57 156 40
</TABLE>
(1) Classes A, B & C commenced
operations on June 5, 1995.
(2) Assumes dividends have been rein-
vested and does not reflect the
effect of sales charges.
(3) Annualized.
(4) Class T commenced operations on
May 30, 1989.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
INCOME FUNDS 17
<PAGE>
NORTHSTAR
STRATEGIC
INCOME
FUND
REGISTRANT
Northstar Strategic Income Fund
PORTFOLIO MANAGERS
Ryan Johanson, Michael Graves
OBJECTIVE
This fund seeks (Picture of bulls eye and arrow)
high current income and
a net asset value with
limited volatility by allo-
cating substantially all of
its assets among (i) U.S.
Government Securities,
(ii) high yield securities,
including preferred
stocks, convertible secu-
rities, zero coupon and
pay-in-kind securities,
lower-rated foreign gov-
ernment securities, (iii)
investment grade corpo-
rate debt securities, and
(iv) investment grade securities
(or unrated securities that
Northstar determines to be of
equivalent quality) issued by
foreign governments or their
agencies or instrumentalities,
or supranational entities.
INVESTMENT
STRATEGY (Picture of a clock)
The portfolio manager rotates the
allocation of assets between the
four sectors based on the econom-
ic outlook, to maximize current
income without assuming undue
risk. To control risk, the fund will
never allocate more than 60% of
its assets to a single sector.
HOLDINGS (Picture of a safe)
In addition to the
securities listed above, the fund
holds debt securities rated as low
as Ca by Moody's or CC by S&P or
in securities that aren't rated but
Northstar considers to be of equiv-
alent quality (junk bonds). Up to
10% of the assets allocated to the
high yield sector can be in bonds
in the lowest rating categories (C
by Moody's and D by S&P) includ-
ing bonds in default. It may also
invest in other higher-risk securi-
ties and engage in other invest-
ment practices. These are
described on page 36.
RISKS (Picture of a scale)
All income funds
are affected by changes in inter-
est rates. This fund is also subject
to the risks associated with
investing in junk bonds and for-
eign securities, but the fund also
attempts to limit these risks by
investing in less volatile securi-
ties. Please refer to the section
beginning on page 36, The risks
of investing in mutual funds.
WHAT YOU PAY
TO INVEST (Picture of a coin)
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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none (1) 5.00 (2) 1.00 (2) 4.00(2)
</TABLE>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Management fee % 0.65 0.65 0.65 0.65
12b-1 fee(3) % 0.30 1.00 1.00 0.95(4)
Other expenses(5) % 0.45 0.45 0.45 0.30
TOTAL FUND OPERATING EXPENSES
AFTER REIMBURSEMENT % 1.40 2.10 2.10 1.90
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 61 90 120 207
Class B
with redemptions $ 73 98 136 225(6)
without redemptions $ 21 66 113 225(6)
Class C
with redemptions $ 32 66 113 243
without redemptions $ 21 66 113 243
Class T
with redemptions $ 61 82 103 209(7)
without redemptions $ 19 60 103 209(7)
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(4) May be increased up to 1.00%.
(5) These figures are after the adviser reimbursed its expenses. Before
reimbursement, other expenses would have been 0.50% for Class A, 0.54% for Class
B, 0.56% for Class C and 0.39% for Class T. Total fund operating expenses would
have been 1.45% for Class A, 2.19% for Class B, 2.21% for Class C and 1.99% for
Class T.
(6) Class B shares convert to Class A shares after year 8. This figure
uses Class A expenses for years 9 and 10.
(7) Class T shares convert to Class A shares after year 8 or on June 2,
1998, whichever is later.
18 INCOME FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the other independent accountants NORTHSTAR
PERFORMED fund's financial performance by prior to 1995. Strategic
(Picture of money) share class. The 1995 and 1996 Income
figures have been audited by The fund's performance is also Fund
Coopers & Lybrand L.L.P., indepen- reported in national newspapers INCOME
dent accountants. Audited by under these trading symbols:
STRINCA, STRINCB or STRINT.
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
YEAR ENDED DECEMBER 31, 1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 12.40 12.24 12.39 12.24 12.38 12.24
Net investment income $ 0.93 0.63 0.85 0.55 0.85 0.55
Net realized and unrealized gain on investments $ 0.35 0.13 0.36 0.15 0.35 0.14
Total from investment operations $ 1.28 0.76 1.21 0.70 1.20 0.69
Dividends from net investment income $ (1.01) (0.60) (0.93) (0.55) (0.93) (0.55)
T otal distributions $ (1.01) (0.60) (0.93) (0.55) (0.93) (0.55)
Net asset value at the end of the period $ 12.67 12.40 12.67 12.39 12.65 12.38
TOTAL INVESTMENT RETURN(2) % 10.88 6.40 10.18 5.89 10.11 5.81
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $ 17,293 21,790 30,733 22,143 4,222 2,172
Ratio of expenses to average net assets % 1.40 1.36(3) 2.10 2.06(3) 2.10 2.02(3)
Ratio of expense reimbursement to average net assets % 0.05 0.07(3) 0.09 0.06(3) 0.11 0.06(3)
Ratio of net investment income to average net assets % 7.55 7.03(3) 6.82 6.47(3) 6.79 6.48(3)
Portfolio turnover rate % 130 153 130 153 130 153
</TABLE>
<TABLE>
<CAPTION>
CLASS T
YEAR ENDED DECEMBER 31, 1996 1995 1994 (4)
<S> C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 12.39 11.71 12.00
Net investment income $ 0.88 0.98 0.51
Net realized and unrealized gain (loss) on investments $ 0.35 0.66 (0.25)
Total from investment operations $ 1.23 1.64 0.26
Dividends from net investment income $ (0.95) (0.96) (0.49)
Dividends from net realized gain on investments sold $ - - (0.05)
Distributions from capital $ - - (0.01)
Total distributions $ (0.95) (0.96) (0.55)
Net asset value at the end of the period $ 12.67 12.39 11.71
TOTAL INVESTMENT RETURN(2) % 10.39 14.54 2.14
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $ 27,350 30,228 25,252
Ratio of expenses to average net assets % 1.90 1.90 1.90(3)
Ratio of expense reimbursement to average net assets % 0.09 0.28 0.63(3)
Ratio of net investment income to average net assets % 7.07 6.86 7.92(3)
Portfolio turnover rate % 130 153 156
</TABLE>
(1) Classes A, B & C commenced opera-
tions on June 5, 1995.
(2) Assumes dividends have been rein-
vested and does not reflect the
effect of sales charges.
(3) Annualized.
(4) Class T commenced operations on
July 1, 1994.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
INCOME FUNDS 19
<PAGE>
NORTHSTAR
GOVERNMENT
SECURITIES
FUND
REGISTRANT
Northstar Government
Securities Fund
PORTFOLIO MANAGER
Ryan Johanson
OBJECTIVE (Picture of a bulls eye and arrow)
This fund seeks
high current income
and conservation of
principal by investing
primarily in debt
obligations issued or
guaranteed by the
U.S. Government or
its agencies and
instrumentalities.
INVESTMENT
STRATEGY (Picture of a clock)
The portfolio manager selects
U.S. Government Securities of
various terms depending on inter-
est rates and market opportuni-
ties. This fund is managed so it
qualifies as an investment for fed-
eral credit unions and political
subdivisions of the State of
Michigan. Shareholders will be
notified 60 days before making
any change to this policy.
HOLDINGS (Picture of a safe)
Under normal con-
ditions, the fund holds 65% of its
assets in securities supported by
the full faith and credit of the U.S.
Government. No more than 20%
of its assets may be in securities
issued by a single instrumentality
or agency not supported by the
full faith and credit of the U.S.
Government. It may also invest in
mortgage-backed, zero-coupon
and other higher-risk securities
and engage in other investment
practices. These are described on
page 36.
RISKS (Picture of a scale)
All income funds
are affected by changes in interest
rates. Shares of this fund are not
insured or guaranteed by the
United States Government or its
agencies or instrumentalities, but
the fund's holdings are not sub-
ject to the credit risks associated
with corporate securities. Please
refer to the section beginning on
page 36, The risks of investing in
mutual funds.
WHAT YOU PAY
TO INVEST (Picture of a coin)
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.
<TABLE>
<CAPTION>
FEES YOU PAY DIRECTLY
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Maximum sales charge on your initial
investment (as a % of offering price) % 4.75 none none none
Maximum deferred sales charge % none (1) 5.00 (2) 1.00 (2) 4.00(2)
</TABLE>
<TABLE>
<CAPTION>
OPERATING EXPENSES PAID EACH YEAR BY THE FUND
(as a % of average net assets)
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C> <C>
Management fee (3) % 0.45 0.45 0.45 0.45
12b-1 fee(4) % 0.30 1.00 1.00 0.65(5)
Other expenses % 0.34 0.35 0.35 0.20
TOTAL FUND OPERATING EXPENSES % 1.09 1.80 1.80 1.30
</TABLE>
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.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3 YEAR 5 YEAR 10
<S> <C> <C> <C> <C>
Class A
with redemptions $ 58 81 105 174
Class B
with redemptions $ 70 90 121 193(6)
without redemptions $ 18 57 97 193(6)
Class C
with redemptions $ 29 57 97 212
without redemptions $ 18 57 97 212
Class T
with redemptions $ 55 64 71 151(7)
without redemptions $ 13 41 71 151(7)
</TABLE>
(1) Except for purchases of $1 million or more, when you sell any of the
shares within 18 months of when you bought them. Please see page 27 for details.
(2) This charge decreases over time. Please see page 27 for details.
(3) After management fee waiver of 0.20% effective January 1, 1989.
Without the waiver, the management fee would be 0.65% and total fund operating
expenses would be 1.29% for Class A, 2.00% for Class B, 2.01% for Class C and
1.51% for Class T.
(4) Because of the 12b-1 fee, long-term shareholders may pay more than the
maximum permitted front-end sales charge.
(5) May be increased up to 0.95%.
(6) Class B shares convert to Class A shares after year 8. This figure uses
Class A expenses for years 9 and 10.
(7) Class T shares convert to Class A shares after year 8 or on June 2,
1998, whichever is later. This figure uses Class A expenses for years 9 and 10.
20 INCOME FUNDS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HOW THE FUND HAS The following chart shows the other independent accountants NORTHSTAR
PERFORMED fund's financial performance by prior to 1995. Government
(Picture of money) share class. The 1995 and 1996 Securities
figures have been audited by The fund's performance is also Fund
Coopers & Lybrand L.L.P., indepen- reported in national newspapers
dent accountants. Audited by under this trading symbol: GOVTT.
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
YEAR ENDED DECEMBER 31, 1996 1995 (1) 1996 1995 (1) 1996 1995 (1)
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning of the period $ 10.07 9.51 10.07 9.51 10.07 9.51
Net investment income $ 0.63 0.34 0.57 0.30 0.58 0.30
Net realized and unrealized gain (loss) on investments $ (0.60) 0.59 (0.60) 0.59 (0.62) 0.59
Total from investment operations $ 0.03 0.93 (0.03) 0.89 (0.04) 0.89
Dividends from net investment income $ (0.62) (0.37) (0.56) (0.33) (0.56) (0.33)
Total distributions $ (0.62) (0.37) (0.56) (0.33) (0.56) (0.33)
Net asset value at the end of the period $ 9.48 10.07 9.48 10.07 9.47 10.07
TOTAL INVESTMENT RETURN(2) % 0.57 10.04 (0.15) 9.61 (0.21) 9.61
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the period ($000s) $ 14,185 3,235 9,135 2,790 1,147 8
Ratio of expenses to average net assets % 1.09 1.02 (3) 1.80 1.70 (3) 1.80 1.68 (3)
Ratio of expense reimbursement and waiver to average net
assets % 0.20 0.20 (3) 0.20 0.20 (3) 0.21 0.20 (3)
Ratio of net investment income to average net assets % 6.85 6.01 (3) 6.05 5.20 (3) 6.22 5.28 (3)
Portfolio turnover rate % 101 295 101 295 101 295
</TABLE>
<TABLE>
<CAPTION>
CLASS T
YEAR ENDED DECEMBER 31, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE
Net asset value at the beginning
of the period $ 10.07 8.74 10.32 9.22 8.99 8.47 8.47 8.26 8.80 9.94
Net investment income $ 0.60 0.58 0.56 0.59 0.61 0.67 0.68 0.72 0.75 0.64
Net realized and unrealized gain
(loss) on investments $ (0.59) 1.35 (1.56) 1.09 0.23 0.52 - 0.21 (0.48) (1.10)
Total from investment operations $ 0.01 1.93 (1.00) 1.68 0.84 1.19 0.68 0.93 0.27 (0.46)
Dividends from net investment
income $ (0.60) (0.60) (0.57) (0.58) (0.61) (0.67) (0.68) (0.72) (0.75) (0.64)
Dividends from net realized gain
on investments sold $ - - - - - - - - - -
Distributions from capital $ - - (0.01) - - - - - (0.06) (0.04)
Total distributions $ (0.60) (0.60) (0.58) (0.58) (0.61) (0.67) (0.68) (0.72) (0.81) (0.68)
Net asset value at the end of the
period $ 9.48 10.07 8.74 10.32 9.22 8.99 8.47 8.47 8.26 8.80
TOTAL INVESTMENT RETURN(2) % 0.32 22.90 (9.82) 18.48 9.77 14.73 8.57 11.73 2.97 (4.72)
RATIOS AND SUPPLEMENTAL DATA
Net assets at the end of the
period ($000s) $ 112,126 150,951 152,608 184,156 144,144 121,389 108,420 123,735 169,421 237,190
Ratio of expenses to average net
assets % 1.30 1.30 1.29 1.31 1.39 1.44 1.43 1.45 1.88 1.79
Ratio of expense reimbursement and
waiver
to average net assets % 0.21 0.20 0.20 0.20 0.20 0.20 0.20 0.20 - -
Ratio of net investment income
(loss) to average net assets % 6.37 6.23 6.00 5.83 6.81 7.68 8.23 8.57 8.47 7.02
Portfolio turnover rate % 101 295 315 81 120 87 17 74 494 412
</TABLE>
(1) Share classes A, B & C commenced
operations on June 5, 1995.
(2) Assumes dividends have been rein-
vested and does not reflect the
effect of sales charges. Unaudited
prior to 1992.
(3) Annualized.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
INCOME FUNDS 21
<PAGE>
MEET THE
PORTFOLIO
MANAGERS
JEFFREY AURIGEMMA Jeffrey Aurigemma has been co-manager of the Northstar
High Yield Fund since December 1996. He joined Northstar in October 1993.
Mr. Aurigemma has over seven years of experience in high yield fixed income
investments. Before joining Northstar, he was a Senior Analyst - Fixed Income
for National Securities & Research.
PETER BAKST Peter Bakst has been co-manager of the Northstar Balance Sheet
Opportunities Fund since July 1996, and co-manager of the Northstar High Yield
Fund since December 1996. He joined Northstar in June 1996.
Mr. Bakst has over ten years of experience in both high yield fixed income
and high yield equity investments. Before joining Northstar, he was Director-
High Yield Debt Group for CS First Boston Corp., President of Presidio Capital
Management, and Managing Director at Bankers Trust Securities Corp.
THOMAS OLE DIAL Thomas Ole Dial has managed the Northstar High Total Return
Fund since its inception, and has co-managed the Northstar Balance Sheet
Opportunities Fund since July 1996. Mr. Dial, who has over ten years of money
management experience, joined Northstar in October 1993.
Before joining Northstar, Mr. Dial was Executive Vice President, Chief
Investment Officer-Fixed Income of National Securities & Research Corporation,
and Senior Portfolio Manager of the National Bond Fund from August 1990 through
July 1993.
JACK FISHER Jack Fisher has been co-manager of the Northstar Income and
Growth Funds since August 1996. He is responsible for the fund's common stock
component.
Mr. Fisher, who has more than 20 years of investment research and equity
management experience, is president of Wilson/Bennett Capital Management Inc.
MICHAEL GRAVES Michael Graves has been co-manager of the Northstar Strategic
Income Fund since December 1996. He joined Northstar in August 1994.
Mr. Graves has over seven years of experience in high yield fixed income
investments. Before joining Northstar, he was a Senior Analyst - Fixed Income
for National Securities & Research.
RYAN JOHANSON Ryan Johanson has managed the Northstar Government Securities
Fund, and has been co-manager of the Northstar Strategic Income Fund since March
1997, when he joined Northstar.
Mr. Johanson has over ten years of experience in fixed-income investments.
Before joining Northstar, he was Director of Global Market Risk Management -
Asia for Barclays Bank, Senior Manager of Banque Indosuez, and Chief Investment
Officer at Fidelity Federal Bank.
LOUIS NAVELLIER Louis Navellier has managed the Northstar Growth + Value
Fund and the Northstar Special Fund since their inception.
Mr. Navellier has been managing assets since 1986 and is the sole owner of
Navellier & Associates Inc., a registered investment adviser that manages
investments for high-net-worth individuals, institutions and pension funds.
GEOFFREY WADSWORTH Geoffrey Wadsworth has managed the Northstar Growth Fund
since February 1996, and has been co-manager of the Northstar Income and Growth
Fund since December 1996. Mr. Wadsworth, who has over 25 years of money
management experience, joined Northstar in October 1993.
Before joining Northstar, Mr. Wadsworth was a Vice President of National
Securities & Research Corporation. He was portfolio manager of the National
Stock Fund and assistant manager of the National Income and Growth Fund,
National Worldwide Opportunities Fund and National Total Return Fund.
22
<PAGE>
SUB-ADVISERS
NAVELLIER FUND MANAGEMENT, INC.
A registered investment adviser, Navellier
Fund Management was established to pro-
vide sub-advisery investment services for
various Northstar portfolios. It currently
serves as sub-adviser to the Northstar
Growth + Value Fund and the Northstar
Special Fund and manages over $2 billion
for private accounts. The company is
wholly-owned by Louis Navellier.
Navellier Fund Management receives a fee
for its services based on the average daily
net assets of the funds it manages. This fee
is paid by Northstar, and not by the funds, at
a rate of 0.64% for the Northstar Growth +
Value Fund and 0.48% for the Northstar
Special Fund.
WILSON/BENNETT CAPITAL
MANAGEMENT, INC.
A registered investment adviser,
Wilson/Bennett serves as sub-adviser on
the common stock portion of the Northstar
Income and Growth Fund. The company
currently manages over $111 million for
individuals, pension plans and corporations.
Wilson/Bennet receives a monthly fee for
its services based on the average daily net
assets it manages. This fee is paid by
Northstar, and not the funds, at a rate of
0.20% on the first $125 million, 0.25% on
the next $125 million, and 0.30% on assets
over $250 million.
PERFORMANCE
PROFILE:
THOMAS OLE DIAL
THESE FIGURES DEMONSTRATE
MR. DIAL'S HISTORICAL TRACK
RECORD. THEY DO NOT INDICATE
HOW THE NORTHSTAR HIGH T
RETURN FUND WILL PERFORM IN
THE FUTURE.
Before joining Northstar in October 1993,
Mr. Dial served as Executive Vice President,
Chief Investment Officer-Fixed Income of
National Securities & Research Corporation.
He was Senior Portfolio Manager of the
National Bond Fund from August 1990
through July 1993 and had full discretionary
authority for the selection of the fund's
investments. On July 31, 1993 the fund had
$614.7 million in net assets.
The National Bond Fund had investment
objectives, policies and strategies that
were substantially similar to those of the
Northstar High Total Return Fund, which
Mr. Dial now manages.
The charts show the average annual
returns for the National Bond Fund during
the period when Mr. Dial managed the
fund and the average annual returns for
the Northstar High Total Return Fund (see
page 24).
These figures reflect changes in share
prices and reinvestment of dividends and
<TABLE>
<CAPTION>
NATIONAL LEHMAN HIGH
BOND FUND YIELD BOND
(%) INDEX (%)
<S> <C> <C>
One year ended July 31, 1993 18.90 15.33
Three years, ended July 31, 1993 23.64 17.50
Cumulative total return 89.03 62.22
August 1990 to July 1993
</TABLE>
(Chart appears here. Plot points to be filled in by customer.)
1990 1991 1992 1993
National Bond Fund
Lehman High Yield Bond Index
distributions, and are after deduction of all
fund fees and expenses.
Included for comparison are performance
figures of the Lehman Brothers High Yield
Bond Index, an unmanaged index of fixed
rate, publicly issued, non-investment grade
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
23
<PAGE>
MEET THE
PORTFOLIO
MANAGERS
PERFORMANCE
PROFILE: THOMAS
OLE DIAL, CONTINUED
debt registered with the SEC. This index is considered to be representative
of the United States market for non-investment
NORTHSTAR HIGH LEHMAN HIGH
TOTAL RETURN YIELD BOND
FUND (%) INDEX (%)
One year, ended 15.70 11.35
December 31, 1996
Three years, ended 8.63 9.51
December 31, 1993
Cumulative total return 31.80 33.61
November 1993 to December 1996
grade debt. It has been adjusted to reflect reinvestment of dividends.
(Chart appears here. Plot points to be filled in by customer)
1993 1994 1995 1996
Northstar High Total Return Fund
Lehman High Yield Bond Index
PERFORMANCE
PROFILE:
LOUIS NAVELLIER
THESE FIGURES DEMONSTRATE THE
HISTORICAL TRACK RECORD OF
NAVELLIER AND ASSOCIATES. THEY
HAVE BEEN PROVIDED BY
NAVELLIER AND ASSOCIATES AND
HAVE NOT BEEN VERIFIED OR
AUDITED. THEY DO NOT INDICATE
HOW THE NORTHSTAR GROWTH +
VALUE FUND WILL PERFORM IN
THE FUTURE.
In addition to owning Navellier Fund Management, Inc., Louis Navellier is
the sole owner of Navellier & Associates, Inc., a registered investment adviser
that has been managing large pools of private assets since 1987.
Mr. Navellier and his staff use a computer-based system he developed to
analyze over 7,000 stocks as a basis for making buying and selling decisions.
The table illustrates his past performance in managing accounts with investment
policies and objectives substantially similar to the Northstar Growth + Value
Fund.
The results shown are a composite of the actual performance of all equity
accounts managed by Navellier & Associates from 1987 to present, calculated
according to AIMR standards. The accounts were not subject to the requirements
of the Investment Company Act of 1940 or the Internal Revenue Code, the
limitations of which might have adversely affected performance results. Results
are after deduction of fees and expenses. Prior to January 1, 1993, any account
expenses not deducted from the accounts, such as management fees paid outside
the accounts, are not reflected in the performance results. If these fees had
been deducted from the accounts, they would have reduced performance. Fees were
not materially different from the Growth + Value Fund's anticipated expense
ratio, but were generally higher than the expense ratio for Class A shares and
lower than the expense ratios for Class B and C shares.
<TABLE>
<CAPTION>
NAVELLIER
AND ASSOCIATES S&P 500
COMPOSITE (%) INDEX (%)
<S> <C> <C>
1987 8.05 5.24
1988 11.40 16.51
1989 22.20 31.58
1990 12.51 (3.15)
1991 66.43 30.50
1992 3.12 7.61
1993 16.83 10.09
1994 1.53 1.31
1995 43.80 37.59
1996 10.68 22.31
one year 10.68 22.31
three years 17.33 19.44
five years 14.25 15.10
ten years 18.28 15.21
since inception 18.28 15.21
</TABLE>
(Chart appears here. Plot points to be filled in by customer)
<TABLE>
<CAPTION>
1987 1988 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Navellier and
Associates Composite
S&P 500 Index
</TABLE>
24
<PAGE>
Your guide to buying, selling and exchanging
shares of Northstar funds
THERE ARE THREE STEPS TO TAKE WHEN
YOU WANT TO BUY, SELL OR EXCHANGE SHARES OF OUR FUNDS:
o first, choose a share class
o second, open a Northstar account and make your first investment
o third, choose one of several ways to buy, sell or exchange shares.
CHOOSING
A SHARE CLASS
All Northstar funds are available
in Class A, Class B and Class C
shares.
The chart below summarizes the differences
between the share classes - your choice of
share class will depend on how much you
are investing and for how long. Large
investments qualify for a reduced Class A
sales charge and avoid the higher distribu-
tion 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 restric-
tion on the amount you can invest at one
time. Your financial adviser can help you, or
feel free to call us for more information.
Some of our funds also have Class T shares.
You can no longer buy Class T shares
unless you are reinvesting income, or
exchanging Class T shares you already
own, including Class T shares of The Cash
Management Fund of Salomon Brothers
Investment Series (a money-market fund
that's available through Northstar, but isn't
one of the Northstar funds).
In addition to Class A, Class B and Class C
shares, the Northstar Growth Fund offers
Class I shares. Class I shares are only
available to certain defined benefit plans,
insurance companies and foundations
investing for their own account. Class I
shares may have different sales charges
and other expenses, which may affect per-
formance. You can obtain additional infor-
mation concerning Class I shares by
calling us at 1-800-595-7827.
We've listed actual expenses charged to the
funds beginning on page 4.
<TABLE>
<CAPTION>
<S> <C> <C>
Maximum CLASS A no limit
amount you CLASS B $500,000
can buy CLASS C $750,000
CLASS T can only be purchased by reinvesting income or exchanging
other Class T shares
Front end CLASS A yes, varies by size of investment
sales charge CLASS B none
CLASS C none
CLASS T none
Deferred CLASS A only on investments of $1 million or more if you sell within 18 months
sales charge CLASS B yes, if you sell within 5 years
CLASS C yes, if you sell within 1 year
CLASS T yes, if you sell within 4 years
Service fee CLASS A .25% per year
CLASS B .25% per year
CLASS C .25% per year
CLASS T .25% per year
Distribution CLASS A .05% per year
fee CLASS B .75% per year
CLASS C .75% per year
CLASS T from .40% to .75% per year (varies by fund)
Conversion CLASS B Class B shares convert to class A after 8 years
CLASS T Class T shares convert to class A after 8 years or on June
2, 1998 (whichever is later)
</TABLE>
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
25
<PAGE>
YOUR GUIDE TO
BUYING, SELLING AND
EXCHANGING SHARES
OF NORTHSTAR FUNDS
<TABLE>
<CAPTION>
FRONT END SALES CHARGES YOUR INVESTMENT FRONT-END SALES CHARGE AMOUNT RETAINED BY DEALERS
(Class A shares only) 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 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 cal culating your sales charge. The
following is a general list of the groups
Northstar recognizes for this benefit.
(Bullet) you, your spouse and your children under the age of 21
(Bullet) a trustee or fiduciary for a single trust, estate or
fiduciary account (including qualifying pension, profit sharing and other
employee benefit trusts)
(Bullet) any other organized group that has been in existence
for at least six months, and wasn't formed soley for the purpose of investing at
a discount.
If you think you might be eligible to reduce your sales charges using any of
these methods, please call us or consult the SAI.
26
<PAGE>
DEFERRED SALES CHARGES
(Classes A, B, C & T)
We deduct a contingent deferred sales
charge (CDSC) from the proceeds when
you sell shares as indicated below. CDSC is
charged on the current market value of the
shares, or on the price you paid for them,
whichever is less. You aren't charged a
CDSC on shares you acquired by reinvest-
ing your dividends, or on amounts repre-
senting 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 $1M - $2,499,999 1.00%
$2,500,000 to $4,999,999 0.50%
$5,000,000 and over 0.25%
CLASS B, C & T SHARES
YEARS AFTER YOU CLASS B CLASS C CLASS T
BOUGHT THE SHARES
1st year 5.00% 1.00% 4.00%
2nd year 4.00% none 3.00%
3rd year 3.00% none 2.00%
4th year 2.00% none 1.00%
5th year 2.00% none none
after 5 years none none none
WHEN THE CDSC MIGHT BE WAIVED
We may waive the CDSC for Class B and
Class C shares if:
(Bullet) the shareholder dies or becomes
disabled
(Bullet) you're selling your shares through our
systematic withdrawal program
(Bullet) you're selling shares of a retirement
plan and you are over 70 1/2 years old
(Bullet) you're exchanging Class B, C or T
shares for the same class of shares of
another Northstar fund.
If you think you might be eligible for a
CDSC waiver, please call us or consult
the SAI.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
27
<PAGE>
YOUR GUIDE TO
BUYING, SELLING AND
EXCHANGING SHARES
OF NORTHSTAR FUNDS
OPENING A
NORTHSTAR ACCOUNT
Once you've chosen the funds you would like to invest in and the share class
you prefer, you're ready to open an account.
First, determine how much money you want to invest. The minimum initial
investment for Northstar funds is:
(Bullet) $2,500 for non-retirement accounts
(Bullet) $250 for retirement accounts
(Bullet) $25 if you are investing using
our automatic investment plan
(see page 30).
Next, open an account in one of two ways: (Bullet) give a check to your broker,
who will open an account for you, or
(Bullet) complete the application enclosed with this prospectus and mail it to
us, along with your check, made payable to Northstar Funds.
TAX-SHELTERED RETIREMENT PLANS
Call or write to us about opening your Northstar account as any one of the
following retirement plans:
(Bullet) IRAs,
(Bullet) SEP-IRAs,
(Bullet) retirement and profit sharing plans for self-
employed persons (Keogh),
(Bullet) and corporate retirement plans (401(k)).
BUYING, SELLING AND
EXCHANGING
Once you've opened an account and made your fi three ways to buy, sell or
exchange shares of Northstar funds:
(Bullet) through your broker
(Bullet) directly, by mail or over the telephone
(Bullet) using one of our automatic plans.
We'll send you a confirmation statement every time you make a transaction
that affects your account balance, except when we pay distributions.
Instructions for each option appear in the chart on page 30, but here are a
few things you should know before you begin.
HOW SHARES ARE PRICED
The price you pay or receive when you buy sell or exchange shares is determined
by the fund's net asset value (NAV) per share and share class. NAV is
calculated each business day at the close of regular trading on the New York
Stock Exchange (usually 4:00 Eastern Standard Time) by dividing the net assets
of each fund class by the number of shares outstanding. To calculate NAV, we
determine the fair market value of the fund's portfolio securities using the
method described in the 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
(Bullet) The minimum amount of each invest ment after your first one is:
- - $100 for non-retirement accounts
- - $25 for retirement accounts
- - $25 if you are investing using
our automatic investment plan
(see page 30).
(Bullet) We record most shares on our books electronically. We will issue
a certificate if you ask us to in writing, however most of our
shareholders prefer not to have their shares in certificate form
because certificated shares can't be sold or exchanged by telephone
or using the systematic withdrawal program.
(Bullet) We have the right to refuse a request to buy shares.
28
<PAGE>
SOME RULES FOR SELLING
(Bullet) Selling your shares may result in a
deferred sales charge. Please refer to the
table on page 27.
(Bullet) We'll pay you within three days from the
time we receive your request to sell,
unless you're selling shares you recently
paid for by check. In that case, we'll pay
(Bullet) you when your check has cleared, which
may take up to 15 days.
(Bullet) If you are a corporation, partnership,
executor, administrator, trustee, custodi-
an, guardian or you are selling shares of
a retirement plan, you'll need to com-
plete special documentation and give us
your request in writing. Please call us for
information.
(Bullet) You can reinvest part or all of the pro-
ceeds of any shares you sell without pay-
ing a sales charge. You must let us know
in writing 30 days from the day you sold
the shares, and buy the same class of
shares you sold. We will reimburse you
for any CDSC you paid. Please see page
32 for information about how this can
affect your taxes.
(Bullet) You won't pay a service charge when you
sell your shares, but your dealer may
charge you fee.
(Bullet) If selling shares results in the value of
your account falling below $500, we have
the right to close your account, so long
as your account has been open for at
least a year. We'll let you know 60 days
in advance, and if you don't bring the
account balance above $500, we'll sell
your shares, mail the proceeds to you
and close your account. We may also
close your account if you give us an
incorrect social security number or tax-
payer identification number.
(Bullet) In unusual circumstances, we may tem-
porarily suspend the processing of
requests to sell.
SOME RULES FOR
EXCHANGING
(Bullet) When you exchange shares, you are
selling shares of one fund and using the
proceeds to buy shares of another fund.
Please see page 32 for information
about how this can affect your taxes.
(Bullet) Before you make an exchange, be sure
to read the sections of the prospectus
that discuss the shares you're
exchanging to.
(Bullet) You can exchange shares of any fund
for the same class of shares of any other
fund, or for shares of The Cash
Management Fund without a sales
charge. You will, however, pay a sales
charge if you buy shares of The Cash
Management Fund, and then exchange
them for Class A shares of any of the
funds.
(Bullet) For the purposes of calculating CDSC,
shares you exchange will continue to
age from the day you first purchased
them, even if you're exchanging into
The Cash Management Fund.
(Bullet) We'll let you know 60 days in advance if
we want to make any changes to these
rules.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
29
<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 o buy
your request until we have all of the documents we need. o sell
o exchange
BY TELEPHONE
To sign up for this service, complete section 9 of the o sell
application or call us at 1-800-595-7827. o exchange
AUTOMATIC INVESTMENT PLAN
To sign up for this service, complete section 7 of the o buy
application or call us at 1-800-595-7827.
SYSTEMATIC WITHDRAWAL PROGRAM
To sign up for this service, complete section 8 of the o sell
application or call us at 1-800-595-7827.
30
<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 for-
ward it to us.
When you're SELLING, give your written request to your
dealer, who may charge you a fee for this service.
Send your request to buy, sell or exchange in writing to:
Northstar Funds, c/o
First Data Investor Services Group Inc. P.O. Box 5131
Westborough MA 01581-5131
Your letter should tell us
(Bullet) your account number
(Bullet) your social security number or taxpayer identification
number the name the account is registered in
(Bullet) the fund name and share class you're buying or selling,
and, for exchanges, the fund name and share class
you're exchanging to
(Bullet) the dollar value or number of shares you want to buy,
sell or exchange.
If you're BUYING include a check payable to Northstar
Funds with your request.
If you're SELLING or EXCHANGING, your request must be
signed by all registered owners of the account.
We'll ask you to guarantee the signatures if:
(Bullet) you are selling more than $50,000 worth of shares
(Bullet) your address of record has changed in the past 30 days
(Bullet) you want us to send the payment to someone other than
the registered owner, to an address other than the
address of record, or in any form other than by check.
Signatures can be guaranteed by a bank, a member of the
national stock exchange or another eligible institution.
You can SELL or EXCHANGE up to $50,000 of your shares by
telephone.
Call us at 1-800-595-7827 between 8:30 a.m. and 4:00 pm
Eastern Standard Time.
When you're calling with your request, we'll ask you for
your name, social security number, broker of record or
other identification. If we don't ask for these things and
process an unauthorized telephone transaction, we are
responsible for any losses to your account. Otherwise you
are responsible for any unauthorized use of the telephone
transaction service.
We'll mail the proceeds of the sale to the address of record
or wire $1,000 or more to any commercial bank in the U.S.
that is a member of the Federal Reserve System. There is
no fee for this service.
You can authorize us to automatically withdraw a mini-
mum 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 can-
cel the program at any time. This program is not available
for Class T accounts.
You can ask us to automatically transfer money from your
Northstar account into your bank account.
We will sell shares or share fractions on your behalf
monthly or quarterly, and automatically deposit the pro-
ceeds 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. This program is not
available for Class T accounts.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
31
<PAGE>
MUTUAL FUND
EARNINGS AND
YOUR TAXES
HOW THE FUNDS
PAY DISTRIBUTIONS
Each Northstar fund distributes virtually all of its net investment income and
net capital gains to shareholders at least annually in the form of dividends.
The funds pay dividends as follows:
Growth Funds annually
Income and Growth Funds quarterly
Income Funds monthly
As a shareholder, you are entitled to a share of the income and capital gains a
fund distributes. The amount you receive is based on the number of shares you
own.
DISTRIBUTION OPTIONS
You can take your distributions as cash or reinvest them in the same class of
shares of any of our funds. You specify your preference when you open your
account. Distribution options vary by share class, as follows. You can change
your distribution instructions at any time by notifying us by phone (if going
to the address of record), or in writing.
CLASS A, B & C SHARES
(Bullet) reinvest both income dividends and capital gain
distributions to buy additional Class A, B or C shares of
any fund you choose
(Bullet) receive income dividends in cash and reinvest capital
gain distributions to buy additional Class A, B or C shares of any
fund you choose
(Bullet) receive both income dividends and capital gain distributions in cash.
If you don't specify how you would like to receive your distributions, we'll
automatically reinvest both income dividends and capital gain distributions in
additional shares of the same fund.
CLASS T SHARES
You must receive all distributions in the same way, either in cash or by
reinvesting them in additional shares of the same fund.
32
<PAGE>
HOW YOUR
DISTRIBUTIONS
ARE TAXED
Each Northstar fund intends to meet the
requirements for being a tax-qualified reg-
ulated investment company, which means
they generally do not pay federal income
tax on the earnings they distribute to share-
holders.
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 divi-
dends paid by U.S. corporations, part of the
dividends the fund pays may be eligible for
the corporate dividends-received deduction.
TIMING YOUR PURCHASE
If you buy shares of a fund just before it
makes a distribution, you will pay the full
price but part of your investment will come
back to you as a taxable distribution. Unless
you are investing in a tax-deferred account,
such as an IRA, this is not to your advantage
because you'll pay tax on the dividend but
will not have shared in the increase in the
net asset value of the fund.
WHEN DISTRIBUTIONS ARE DECLARED
For tax purposes, distributions declared by
the fund in October, November or
December and paid to you in January are
taxable in the calendar year in which they
were declared.
BACKUP WITHHOLDING TAX
We'll notify you each year of the tax status
of dividends and distributions. If we don't
have your tax identification number, or if
you have been told by the IRS that you are
subject to backup withholding tax, we may
be required to withhold U.S. federal income
tax on any distributions at the rate of 31%.
WHEN YOU SELL YOUR SHARES
When you sell or exchange shares you will
realize a capital gain or loss, depending on
the difference between what your shares
cost you and what you receive for them. A
capital gain or loss will be long-term or
short-term, depending on the length of time
you held the shares.
In your federal income tax return you
report a capital gain as income and a capi-
tal loss as a deduction.
CONSULT YOUR TAX ADVISER
The information above is general in nature.
You should consult your tax adviser to dis-
cuss how investing in Northstar funds
affects your personal tax situation.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
33
<PAGE>
THE BUSINESS
OF MUTUAL
FUNDS
HOW THE FUNDS
ARE ORGANIZED AND
MANAGED
Each of the Northstar funds is a diversified mutual fund. The Northstar Growth
+ Value Fund, Northstar Income and Growth Fund, and Northstar High Total Return
Fund are all series of the Northstar Trust (formerly the Northstar Advantage
Trust), which is registered as an investment company with the SEC. All of the
other funds are trusts registered separately with the SEC.
The trustees of each SEC-registered trust oversee the business affairs of the
funds and are responsible for major decisions about each fund's investment
objectives and policies.
The funds do not hold regular shareholder meetings, but may hold special
meetings. A special meeting is called if investors holding at least 10% of the
outstanding shares of a fund request it. Certain objectives and policies of the
funds may only be changed by shareholder vote. A shareholder vote is requir of
a Northstar fund because the fund invest ment objectives are fundamental.
The day-to-day management of the funds is handled by the following companies
and advisers appointed by the trustees:
INVESTMENT ADVISER
Provides advice and recommendations about each fund's investments. The invest-
ment adviser is paid out of each fund's management fee, which are listed begin-
ning on page 4.
NORTHSTAR INVESTMENT MANAGEMENT
CORPORATION
TWO PICKWICK PLAZA
GREENWICH, CT 06830
ADMINISTRATOR
Provides administrative, compliance and accounting services to the funds. The
administrator receives an annual administrative services fee from each fund of
.10% of the fund's average daily net assets, plus $5 per account per year.
NORTHSTAR ADMINISTRATORS CORPORATION
TWO PICKWICK PLAZA
GREENWICH, CT 06830
DISTRIBUTOR
Markets the funds and distributes shares through brokers and other financial
representatives.
NORTHSTAR DISTRIBUTORS, INC.
TWO PICKWICK PLAZA
GREENWICH, CT 06830
CUSTODIAN
Holds all the funds assets.
CUSTODIAN AND FUND ACCOUNTING AGENT:
STATE STREET BANK AND TRUST COMPANY
225 FRANKLIN STREET
BOSTON, MA 02110
o Growth Fund
o Growth + Value Fund
o Special Fund
o Income and Growth Fund
o Balance Sheet Opportunities Fund
o High Total Return Fund
o Strategic Income Fund
o High Yield Fund
o Government Securities Fund
TRANSFER AGENT
Handles shareholder record-keeping and statements, distribution of dividends
and processing of orders to buy and sell shares.
FIRST DATA INVESTOR SERVICES GROUP, INC.
4400 COMPUTER DRIVE
WESTBOROUGH, MA 01581-5120
PORTFOLIO MANAGERS AND SUB-ADVISERS
You'll find profiles of all of our portfolio managers and sub-advisers to the
funds beginning on page 22.
34
<PAGE>
HOW DEALERS ARE
COMPENSATED
Dealers receive payment for selling shares
of Northstar funds in three ways:
THEY RECEIVE A COMMISSION WHEN
YOU BUY SHARES
The amount of the commission depends on
the amount you invest and the share class
you buy. Sales commissions are detailed in
the chart below.
(Bullet) CLASS A INVESTMENTS
(% OF OFFERING PRICE)
<TABLE>
<CAPTION>
COMMISSION AMOUNT
RECEIVED BY DEALERS PAID BY THE
OUT OF SALES CHARGES DISTRIBUTOR
YOU PAY
<S> <C> <C>
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
</TABLE>
(Bullet) CLASS B INVESTMENTS
Receives 4% of sale price from the distributor
(Bullet) CLASS C INVESTMENTS
Receives 1% of sale price from the distributor
THEY ARE PAID A FEE BY THE DISTRIBUTOR
FOR SERVICING YOUR ACCOUNT
They receive a service fee depending on the
average net asset value of the class of
shares their clients hold in Northstar funds.
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 beginning
on page 4. Service and distribution fee
percentages appear on page 25.
THEY MAY RECEIVE ADDITIONAL
BENEFITS AND REWARDS
Selling shares of Northstar funds may make
dealers eligible for awards or to participate
in sales programs sponsored by Northstar.
The costs of these benefits and rewards are
not deducted from the assets of the funds-
they are paid from the distributor's own
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. All pay-
ments it receives for Class T shares are
paid to Advest Inc.
(Picture of a telephone) If you have any questions, please call 1-800-595-7827
35
<PAGE>
THE RISKS OF INVESTING
IN MUTUAL FUNDS
Risk is the potential that your investment will lose money or not earn as much
as you hope. The Northstar funds have varying degrees of risk, depending on the
securities they invest in. There is no guarantee that a fund will achieve its
investment objective.
You'll find a discussion of the risk factors associated with each fund
beginning on page 4.
This section provides information about the risks associated with different
kinds of securities. It also lists additional investment practices that may
involve elements of risk.
EQUITIES
(Bullet) Give the buyer ownership rights in the issuer. Common and preferred
stocks, convertible securities and stock purchase rights are types
of equities.
(Bullet) The market value of an equity security may go up or down rapidly
depending on market conditions. This affects the value of the shares
of a fund, and the value of your investment.
(Bullet) Securities of smaller companies may be subject to more abrupt or
erratic market movements because they are traded in lower volume and
are subject to greater changes in earnings and growth prospects.
DEBT SECURITIES
(Bullet) Obligations to repay borrowed money within a certain time with or
without interest. Zero-coupon securities, pay-in-kind securities,
discount obligations, mortgage-backed securities, convertible
securities and high yield securities are types of debt securities.
(Bullet) Debt securities are affected by changes in interest rates. In general,
when interest rates go up, the value of a debt security decreases;
when interest rates go down, the value of a debt security increases.
(Bullet) There is also the risk that the borrower won't be able to fulfill its
obligation, resulting in loss or a lower price than anticipated.
LOWER-RATED OR JUNK BONDS
The chart indicates which funds invest in high yield securities (junk bonds).
In addition to general risks listed above that are associated with debt
securities, junk bonds have special risks:
(Bullet) They fluctuate more in value than higher
rated securities.
(Bullet) They are more subject to the risk that the
borrower won't fulfill its obligation.
(Bullet) There may not be a market to sell them
at a reasonable price, resulting in loss or
a lower price than anticipated.
(Bullet) The fund's ability to achieve its invest-
ment objective may be more dependent
on Northstar's credit analysis than is the
case for higher rated securities.
<TABLE>
<CAPTION>
QUALITY RATING BALANCE SHEET HIGH TOTAL HIGH YIELD STRATEGIC
OPPORTUNITIES FUND RETURN FUND FUND INCOME FUND
<S> <C> <C> <C> <C>
Investment grade 9.1 1.9 - 3.7
BB 10.4 18.8 35.5 27.3
B 27.8 43.3 49.4 20.3
CCC - 4.0 1.2 1.4
CC - 0.0 - 0.0
C 3.1 - - 0.0
D - - - 0.0
Non-rated 6.1 21.3 1.1 5.1
U.S. Governments, equities & others 43.5 10.7 12.8 42.2
TOTAL 100% 100% 100% 100%
</TABLE>
36
<PAGE>
FOREIGN INVESTMENTS
(Bullet) Securities issued by companies or
governments of foreign countries. May
include equities and debt securities
including sovereign debt obligations
(securities issued to refinance foreign
government bank loans and other debt-
also known as Brady Bonds).
(Bullet) Subject to all of the risks associated with
equity and debt securities. There are also
other risks that can affect the value of a
foreign investments:
- - foreign markets may 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 eco-
nomic developments, seizure or
nationalization of foreign deposits, and
government restrictions.
EMERGING MARKETS
(Bullet) 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 rapidly changing
interest rates.
OTHER, HIGHER RISK
SECURITIES
ILLIQUID SECURITIES-
FUNDS ARE LIMITED TO 15% OF NET ASSET VALUE
(Bullet) Securities that can't be sold quickly at a
reasonable price, or that can't be sold on
the open market. Includes restricted
securities and private placements.
(Bullet) Used to realize higher profits.
(Bullet) There may be fewer market players
which can result in lower prices, and
sales can take longer to complete.
(Bullet) Following guidelines established by the
trustees of each fund, Northstar 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
(Bullet) Securities that derive their value from
the performance of an underlying asset.
Usually take the form of a contract to
buy or sell an asset or commodity either
now or in the future, but mortgage and
other asset-backed securities are also
generally considered derivatives. Types
of derivative securities include options,
futures contracts, options on futures and
forward contracts.
(Bullet) Used often to "hedge" or offset market
fluctuations or changes in currency
exchange or interest rates. May also be
used for speculative purposes to increase
returns.
(Bullet) In addition to the risks associated with
equities and debt securities, there are
several special risks associated with the
use of derivatives:
- - changes in the value of the derivative
may not match changes in the value of
its underlying asset
- - hedging may not be successful, and
may prevent the fund from making
other gains
- - derivatives used for speculative pur-
poses can result in gains or losses that
are substantially greater than the
derivative's original cost.
37
<PAGE>
THE RISKS OF
INVESTING IN
MUTUAL FUNDS
INVESTMENT PRACTICES
REPURCHASE AGREEMENTS - FUNDS ARE LIMITED
(Bullet) Buying a security from a bank or dealer who must buy it back at a
fixed price on a specified day. Repurchase agreements that
mature after more than seven days are considered to be illiquid
investments. Any one investment in this type of repurchase
agreement can only be 5% of the fund's net asset value.
(Bullet) Used for temporary defensive purposes or to generate income from
cash balances.
(Bullet) The bank or dealer may not be able to buy back the security.
SHORT-TERM TRADING - NO LIMIT
(Bullet) Selling a security soon after you buy it.
(Bullet) Used when the fund needs to be more liquid, in response to changes in
interest rates and economic or other developments, or when a security
has reached its price or yield objective.
(Bullet) May result in higher costs for brokerage commissions, dealer mark-ups
and other transactions costs, as well as taxable capital gains.
TEMPORARY INVESTMENTS-NO LIMIT
(Bullet) Temporarily maintaining part or all of the fund's assets in cash or in
U.S. Government securities, commercial paper, banker's acceptances,
repurchase agreements and certificates of deposit.
(Bullet) Used for temporary and defensive purposes in periods of unusual market
conditions.
(Bullet) Provides lower returns.
WHEN-ISSUED SECURITIES AND FORWARD
COMMITMENTS - NO LIMIT, EXCEPT THE
NORTHSTAR GOVERNMENT SECURITIES FUND
(Bullet) A commitment to buy a security on a
specific day in the future at a specified price.
(Bullet) Used to realize short-term profits.
(Bullet) If made through a dealer, there is a risk that the dealer
won't complete the sale, and that the fund will lose out on a good
yield or price.
(Bullet) There is also a risk that the value of the security will change
before the transaction is settled, resulting in short-term losses
instead of gains. The Northstar Government Securities Fund does not
intend to acquire securities on a "when-issued" basis.
38
<PAGE>
(Graph of a star appears here)
<PAGE>
WHERE TO GO
FOR MORE INFORMATION
You'll find more information about the Northstar family of funds in our:
ANNUAL REPORTS
The Annual reports contain information about fund performance,
the financial statements and the auditor's reports.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains complete information about the Northstar funds.
The SAI is legally part of this prospectus (it is incorporated by reference).
A copy has been filed with the Securities and Exchange Commission.
Please write or call for a free copy of the Annual reports or the SAI:
The Northstar Funds
2 Pickwick Plaza
Greenwich, CT
06830
1-800-595-7827
(Northstar logo appears bottom left)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
New Account Application
- ---------------------------------------------------------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
---------------------------------------------------------------------------------------------------------------------------------
Type of Account (Choose One Only):
/ / INDIVIDUAL / / JOINT ACCOUNT / / FOR A MINOR / / TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY
USE LINE A USE LINES A & B USE LINE C USE LINE D
Print name exactly as account is to be registered:
A._________________________________________________ ___-____-_____
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER
B._________________________________________________ ___-____-_____
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER
C._________________________________________________
CUSTODIAN'S NAME (FIRST, MIDDLE, LAST)
_________________________________________________ ____-____-_____
MINOR'S NAME (FIRST, MIDDLE, LAST) MINOR'S SOCIAL SECURITY NUMBER
_________________________________________________ ___-_________
TAX I.D. NUMBER
UNDER THE _____________ UNIFORM GIFTS/TRANSFERS TO MINORS ACT OR
NAME OF STATE
D._________________________________________________ ___-___-_____
NAME (IF A TRUST, INCLUDE DATE OF AGREEMENT) SOCIAL SECURITY NUMBER
---------------------------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
---------------------------------------------------------------------------------------------------------------------------------
___________________________________________________
STREET
( )______________________________________________
DAYTIME PHONE NUMBER
___________________________________________________
CITY STATE ZIP
---------------------------------------------------------------------------------------------------------------------------------
3 PURCHASE OF SHARES
---------------------------------------------------------------------------------------------------------------------------------
MINIMUM INITIAL INVESTMENT $2,500 / / MAKE CHECK PAYABLE TO NORTHSTAR FUNDS. Check enclosed for $__________
/ / Shares purchased and paid for through my/our investment dealer.
Trade Date_______ Order#_______
Number of Shares: Class A_______ Class B_______ Class C_______
Please check the box beside the name of each Northstar Advantage Fund being purchased and enter the dollar amount of each
purchase. All distributions will be reinvested in additional shares unless instructed otherwise.
/ / GROWTH FUND $_______ / / GROWTH + VALUE FUND $_______ / / SPECIAL FUND $_______
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
/ / INCOME AND GROWTH FUND $_______ / / BALANCE SHEET OPPORTUNITIES FUND $_______ / / HIGH TOTAL RETURN FUND $_______
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
/ / HIGH YIELD FUND $_______ / / STRATEGIC INCOME FUND $_______ / / GOVERNMENT SECURITIES FUND $_______
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
/ / MONEY MARKET PORTFOLIO FUND $_______
(Money Market Account) Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________
*Please reinvest my dividends from ________________ to ________________
(Name of Fund) (Name of Fund)
---------------------------------------------------------------------------------------------------------------------------------
4 LETTER OF INTENT, RIGHT OF ACCUMULATION (CLASS A SHARES ONLY)
---------------------------------------------------------------------------------------------------------------------------------
LETTER OF INTENT
Although I/we have made no commitment to do so, I/we intend to invest the dollar amount indicated below within a 13-month
period in shares of one or more of the eligible Northstar Funds.
/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000
RIGHTS OF ACCUMULATION
If this account qualified for a Reduced Sales Charge under the terms of the current Prospectus, please list account numbers:
/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000
- -
---- -------- ---- ---------
---------------------------------------------------------------------------------------------------------------------------------
5 AGREEMENTS AND SIGNATURES
---------------------------------------------------------------------------------------------------------------------------------
I/We am/are of legal age and wish to establish an account in accordance with the terms and conditions of the current applicable
Prospectus, a copy of which has been received and read. I/We understand and agree that neither First Data nor the Northstar Funds
shall be held liable for any loss, liability, cost or expense for acting in accordance with this application, or any section
thereof. I/We acknowledge that the account(s) established by this application will be subject to the telephone exchange and
redemption privileges described in this current prospectus, unless indicated otherwise, with the understanding that the Fund,
Northstar and the Transfer Agent will not be able to verify the authenticity of any telephone or redemption order received from
persons other than registered representatives of Northstar Distributors, Inc. and that they will not be liable for following
telephone exchange or redemption instructions that prove to be fraudulent. Shareholders would bear the loss resulting from
instructions entered by an unauthorized third party.
---------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL (OR CUSTODIAN) DATE
---------------------------------------------------------------------------------------------------------------------------------
CO-OWNER (OR CORPORATE OFFICER, PARTNER OR TRUSTEE) DATE
---------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
---------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification number and (2)
that I am not* subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue
Service has notified me that I am no longer subject to backup withholding.
*If you are subject to backup withholding, please check here [ ].
Signature(s) ____________________________________________ Date __________________________________________________________________
Signature(s) ____________________________________________ Date __________________________________________________________________
---------------------------------------------------------------------------------------------------------------------------------
6 FOR DEALER USE ONLY
---------------------------------------------------------------------------------------------------------------------------------
We guarantee the signature(s) and legal capacity of the applicant(s) referred to herein, and in the case of a withdrawal program
we affirm that, in our opinion, the designated withdrawal is reasonable in view of the circumstances involved.
---------------------------------------------------------------------------------------------------------------------------------
DEALER NAME (PLEASE PRINT CAREFULLY) DEALER NO.
---------------------------------------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE (MUST BE PROVIDED FOR WITHDRAWAL PROGRAMS, TELEPHONE REDEMPTIONS AND TELEPHONE EXCHANGES)
---------------------------------------------------------------------------------------------------------------------------------
BRANCH NUMBER BRANCH ADDRESS
---------------------------------------------------------------------------------------------------------------------------------
REP NAME (PLEASE PRINT CAREFULLY) FIRST AND LAST NAME PHONE NUMBER (IMPORTANT) REP NUMBER
( )
----------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------
Upon completion of the application, please
return with a check made payable to:
NORTHSTAR FUNDS,
c/o FIRST DATA, P.O. Box 5131, WESTBOROUGH, MA 01581-5131
SPECIAL ACCOUNT OPTION
---------------------------------------------------------------------------------------------------------------------------------
7 AUTOMATIC INVESTMENT PLAN
---------------------------------------------------------------------------------------------------------------------------------
Attach a VOIDED CHECK from your bank account and a check for an initial deposit to establish this plan (minimum $25). Please
complete the following information to invest automatically the dollar amount stated below on approximately the 15th / /, 30th
/ / or the 15th and 30th / /, of the month.
The applicant authorizes the Northstar Funds to draw monthly drafts on your bank account number _________ and use the proceeds
($25 minimum) therefrom to purchase shares of Northstar ___________ _____________
FUND NAME $ AMOUNT
Registered in the name(s) of __________________________________________
RESTRICTIONS
Each purchase of shares will be made at the current offering price
determined as of the close of business on the day on which such purchase is
made. Automatic investments may be discontinued by either Northstar Funds
or the purchaser upon 30 days written notice to the other.
The Northstar Funds reserves the right to cancel any transaction which was
executed in reliance on a draft authorized where the bank upon which the
draft was drawn refused to make payment thereon for any reason.
ATTACH VOID CHECK HERE
---------------------------------------------------------------------------------------------------------------------------------
8 WITHDRAW PROGRAM
---------------------------------------------------------------------------------------------------------------------------------
A Withdrawal Plan is available on Class A shares (non-certificated shares
only) provided the Fund being purchased has a value of $5,000 or more.
Withdrawals with respect to Class B and Class C shares are limited (see the
Prospectus) and are conditional upon dividends and capital gains being
automatically reinvested.
1. The amount of each payment shall be ($25 minimum)
--------- -------- --------- --------
FUND NAME $ AMOUNT FUND NAME $ AMOUNT
2. Payments are to be made / / Monthly / / Quarterly / / Semi-Annually / / Annually on the / / 1st or / / 15th of the month
Choose one of the following methods of distribution.
/ / ACH Please have my payments electronically transferred to my bank. I have attached the required voided check and I have
verified that my bank is a member of the Automated Clearing House (ACH).
/ / MAIL Please have my payments mailed. I understand that the payments will be made payable to me and mailed to my account
mailing address unless a special designation is referenced below:
---------------------------------------------------------------------------------------------------------------------------------
NAME (PLEASE PRINT CAREFULLY.)
---------------------------------------------------------------------------------------------------------------------------------
STREET
---------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE YOUR BANK ACCOUNT NUMBER
---------------------------------------------------------------------------------------------------------------------------------
ATTACH VOID CHECK HERE
---------------------------------------------------------------------------------------------------------------------------------
9 TELEPHONE EXCHANGE REDEMPTION AND EXPEDITED TELEPHONE REDEMPTION
---------------------------------------------------------------------------------------------------------------------------------
Signature guarantees are required if: 1. Redemption is over $50,000.
2. Proceeds are to be sent to address other than record.
ALL SHAREHOLDERS AND THEIR DEALER REPRESENTATIVES WILL AUTOMATICALLY RECEIVE TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES,
(NON-CERTIFICATED SHARES ONLY) UNLESS AN ELECTION NOT TO RECEIVE THESE PRIVILEGES IS EXERCISED BELOW.
/ / DO NOT CODE MY / / DO NOT CODE MY
ACCOUNT FOR TELEPHONE ACCOUNT FOR TELEPHONE
EXCHANGE PRIVILEGE. REDEMPTION PRIVILEGE.
/ / PLEASE WIRE REDEMPTION PROCEEDS TO MY BANK. (I UNDERSTAND THE MINIMUM FOR WIRES IS $1,000.) MY VOIDED CHECK IS ATTACHED.
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1997
NORTHSTAR GROWTH FUND
NORTHSTAR GROWTH + VALUE FUND
NORTHSTAR SPECIAL FUND
NORTHSTAR INCOME AND GROWTH FUND
NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND
NORTHSTAR HIGH TOTAL RETURN FUND
NORTHSTAR HIGH YIELD FUND
NORTHSTAR STRATEGIC INCOME FUND
NORTHSTAR GOVERNMENT SECURITIES FUND
TWO PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
(203) 863-6200
(800) 595-7827
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Funds dated March 1, 1997, as each may be revised from time to time. To
obtain a copy of the Funds' 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 Navellier Fund
Management, Inc. (the "Subadviser") to serve as subadviser to the Northstar
Growth + Value Fund and Northstar Special Fund, subject to the supervision of
Northstar. Wilson/Bennett Capital Management, Inc. serves as subadviser to
Northstar Income and Growth Fund. Northstar Distributors, Inc. (the
"Underwriter") is the underwriter to the Funds. Northstar Administrators
Corporation (the "Administrator") is the Funds' administrator. The Underwriter
and the Administrator are affiliates of Northstar.
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TABLE OF CONTENTS
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INVESTMENT RESTRICTIONS...................................................................................... 2
INVESTMENT TECHNIQUES........................................................................................ 5
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION.............................................................. 11
SERVICES OF NORTHSTAR, THE SUBADVISERS AND THE ADMINISTRATOR................................................. 13
NET ASSET VALUE.............................................................................................. 15
PURCHASES AND REDEMPTIONS.................................................................................... 16
DIVIDENDS, DISTRIBUTIONS AND TAXES........................................................................... 17
UNDERWRITER AND DISTRIBUTION SERVICES........................................................................ 20
TRUSTEES AND OFFICERS........................................................................................ 24
OTHER INFORMATION............................................................................................ 27
PERFORMANCE INFORMATION...................................................................................... 28
FINANCIAL STATEMENTS......................................................................................... 32
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INVESTMENT RESTRICTIONS
NORTHSTAR GROWTH + VALUE FUND. The Fund has adopted investment restrictions
numbered 1 through 11 as fundamental policies. These restrictions cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended) of such Fund's outstanding voting
shares. Investment restrictions numbered 12 through 15 are not fundamental
policies and may be changed by vote of a majority of the Trust's Board members
at any time. The Fund may not:
1. Borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that it may: (a) borrow from banks but only if,
immediately after such borrowing there is asset coverage of 300%, and (b) enter
into transactions in options, futures, and options on futures and other
transactions not deemed to involve the issuance of senior securities;
2. Underwrite the securities of others;
3. Purchase or sell real property, including real estate limited
partnerships (each of these Funds may purchase marketable securities of
companies that deal in real estate or interests therein, including real estate
investment trusts);
4. Deal in commodities or commodity contracts, except in the manner
described in the current Prospectus and SAI of the Fund;
5. Make loans to other persons (but the Fund may, however, lend portfolio
securities, up to 33% of net assets at the time the loan is made, to brokers or
dealers or other financial institutions not affiliated with the Fund or
Northstar, subject to conditions established by Northstar (See "Lending
Portfolio Securities" in this SAI), and may purchase or hold participations in
loans, in accordance with the investment objectives and policies of the Fund, as
described in the current Prospectus and SAI of the Fund;
6. Purchase on margin (except that for purposes of this restriction, the
deposit or payment of initial or variation margin in connection with futures
contracts will not be deemed to be purchases of securities on margin);
7. Sell short, except that these Funds may enter into short sales against
the box;
8. Invest more than 25% of its assets in any one industry or related group
of industries;
9. With respect to 75% of the Fund's assets, purchase a security (other
than U.S. Government obligations) if, as a result, more than 5% of the value of
total assets of the Fund would be invested in securities of a single issuer;
10. Purchase a security if, as a result, more than 10% of any class of
securities, or more than 10% of the outstanding voting securities of an issuer,
would be held by the Fund;
11. Borrow money except to the extent permitted under the 1940 Act;
12. Purchase securities of other investment companies, except in connection
with a merger, consolidation or sale of assets, and except that these Funds may
purchase shares of other investment companies, subject to such restrictions as
may be imposed by the 1940 Act and rules thereunder or by any state in which
shares of the Fund are registered;
13. Make an investment for the purpose of exercising control over
management;
14. Invest more than 15% of its net assets in illiquid securities; or
15. Borrow any amount in excess of 10% of their respective assets, other
than for temporary emergency or administrative purposes. In addition, assets,
the Fund will not make additional investments when its borrowings exceed 5% of
total assets.
NORTHSTAR INCOME AND GROWTH FUND AND NORTHSTAR HIGH TOTAL RETURN FUND. The Funds
have adopted investment restrictions numbered 1 through 11 as fundamental
policies. These restrictions cannot be changed without approval by the holders
of a majority (as defined in the Investment Company Act of 1940, as amended) of
such Fund's outstanding voting shares. Investment restrictions numbered 12
through 17 are not fundamental policies and may be changed by vote of a majority
of the Trust's Board members at any time. The Funds may not:
1. Borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that it may: (a) borrow from banks but only if,
immediately after such borrowing there is asset coverage of 300%, and (b) enter
into transactions in options, futures, and options on futures and other
transactions not deemed to involve the issuance of senior securities;
2. Underwrite the securities of others;
3. Purchase or sell real property, including real estate limited
partnerships (each of these Funds may purchase marketable securities of
companies that deal in real estate or interests therein, including real estate
investment trusts);
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4. Deal in commodities or commodity contracts, except in the manner
described in the current Prospectus and SAI of the Fund;
5. Make loans to other persons (but the Funds may, however, lend portfolio
securities, up to 33% of net assets at the time the loan is made, to brokers or
dealers or other financial institutions not affiliated with the Funds or
Northstar, subject to conditions established by Northstar (See "Lending
Portfolio Securities" in this SAI), and may purchase or hold participations in
loans, in accordance with the investment objectives and policies of the Fund, as
described in the current Prospectus and SAI of the Fund;
6. Participate in any joint trading accounts;
7. Purchase on margin (except that for purposes of this restriction, the
deposit or payment of initial or variation margin in connection with futures
contracts will not be deemed to be purchases of securities on margin);
8. Sell short, except that these Funds may enter into short sales against
the box;
9. Invest more than 25% of its assets in any one industry or related group
of industries;
10. Purchase a security (other than U.S. Government obligations) if, as a
result, more than 5% of the value of total assets of the Fund would be invested
in securities of a single issuer;
11. Purchase a security if, as a result, more than 10% of any class of
securities, or more than 10% of the outstanding voting securities of an issuer,
would be held by the Fund;
12. Invest in a security if, as a result of such investment, more than 5%
of its total assets (taken at market value at the time of such investment) would
be invested in securities of issuers (other than issuers of federal agency
obligations) having a record, together with predecessors or unconditional
guarantors, of less than three years of continuous operation;
13. Purchase securities of other investment companies, except in connection
with a merger, consolidation or sale of assets, and except that these Funds may
purchase shares of other investment companies, subject to such restrictions as
may be imposed by the 1940 Act and rules thereunder or by any state in which
shares of the Fund are registered;
14. Purchase or retain securities of any issuer if 5% of the securities of
such issuer are owned by those officers and directors or trustees of the Fund or
of Northstar who each own beneficially more than 1/2 of 1% of its securities;
15. Make an investment for the purpose of exercising control over
management;
16. Invest more than 15% of its net assets (determined at the time of
investment) in illiquid securities, including securities subject to legal or
contractual restrictions on resale (which may include private placements and
those 144A securities for which the Trustees, pursuant to procedures adopted by
the Fund, have not determined there is a liquid secondary market), repurchase
agreements maturing in more than seven days, options traded over the counter
that a Fund has purchased, securities being used to cover options a Fund has
written, securities for which market quotations are not readily available, or
other securities that, legally or in the Adviser's or Trustees' opinion, may be
deemed illiquid; or
17. Invest in interests in oil, gas or other mineral exploration
development programs (including oil, gas or other mineral leases).
As a fundamental policy, these Funds may borrow money from banks to the
extent permitted under the 1940 Act. As an operating (non-fundamental) policy,
these Funds do not intend to borrow any amount in excess of 10% of their
respective assets, and would do so only for temporary emergency or
administrative purposes. In addition, to avoid the potential leveraging of
assets, neither of these Funds will make additional investments when its
borrowings, including those investment techniques which are regarded as a form
of borrowing, are in excess of 5% of total assets. If either of these Funds
should determine to expand its ability to borrow beyond the current operating
policy, the Fund's Prospectus would be amended and shareholders would be
notified.
NORTHSTAR SPECIAL, GROWTH, BALANCE SHEET OPPORTUNITIES, GOVERNMENT SECURITIES,
STRATEGIC INCOME AND HIGH YIELD FUNDS. The Funds have adopted investment
restrictions numbered 1 through 12 as fundamental policies. These restrictions
cannot be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Fund's outstanding
voting shares. Investment restrictions numbered 13 through 21 are not
fundamental policies and may be changed by vote of a majority of the Trust's
Board members at any time. Each Fund may not:
1. Borrow money, except from a bank and as a temporary measure for
extraordinary or emergency purposes, provided the Fund maintains asset coverage
of 300% for all borrowings;
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2. Purchase securities of any one issuer (except Government securities) if,
as a result, more than 5% of the Fund's total assets would be invested in that
issuer, or the Fund would own or hold more than 10% of the outstanding voting
securities of the issuer; PROVIDED, HOWEVER, that up to 25% of the Fund's total
assets may be invested without regard to these limitations;
3. Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of portfolio securities, the Fund may be deemed
to be an underwriter;
4. Concentrate its assets in the securities of issuers all of which conduct
their principal business activities in the same industry (this restriction does
not apply to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities);
5. Make any investment in real estate, commodities or commodities
contracts, except that these Funds may: (a) purchase or sell readily marketable
securities that are secured by interest in real estate or issued by companies
that deal in real estate, including real estate investment and mortgage
investment trusts; and (b) engage in financial futures contracts and related
options, as described herein and in the Fund's Prospectus;
6. Make loans, except that these Funds may: (a) invest in repurchase
agreements, and (b) loan its portfolio securities in amounts up to one-third of
the market or other fair value of its total assets;
7. Issue senior securities, except as appropriate to evidence indebtedness
that it is permitted to incur, provided that the deposit or payment by the Fund
of initial or maintenance margin in connection with futures contracts and
related options is not considered the issuance of senior securities;
8. Borrow money in excess of 5% of its total assets (taken at market
value);
9. Pledge, mortgage or hypothecate in excess of 5% of its total assets (the
deposit or payment by a Fund of initial or maintenance margin in connection with
futures contracts and related options is not considered a pledge or
hypothecation of assets);
10. Purchase more than 10% of the voting securities of any one issuer,
except U.S. Government Securities;
11. Invest more than 15% of its net assets in illiquid securities,
including repurchase agreements maturing in more than 7 days, that cannot be
disposed of within the normal course of business at approximately the amount at
which the Fund has valued the securities, excluding restricted securities that
have been determined by the Trustees of the Fund (or the persons designated by
them to make such determinations) to be readily marketable;
12. Purchase securities of any issuer with a record of less than 3 years of
continuous operations, including predecessors, except U.S. Government Securities
and obligations issued or guaranteed by any foreign government or its agencies
or instrumentalities, if such purchase would cause the investments of a Fund in
all such issuers to exceed 5% of the total assets of the Fund taken at market
value;
13. Purchase securities on margin, except these Funds may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities (the deposit or payment by a Fund of initial or maintenance margin
in connection with futures contracts or related options is not considered the
purchase of a security on margin);
14. Write put and call options, unless the options are covered and the Fund
invests through premium payments no more than 5% of its total assets in options
transactions, other than options on futures contracts;
15. Purchase and sell futures contracts and options on futures contracts,
unless the sum of margin deposits on all futures contracts held by the Fund, and
premiums paid on related options held by the Fund, does not exceed more than 5%
of the Fund's total assets, unless the transaction meets certain "bona fide
hedging" criteria (in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in computing the 5%);
16. Invest in securities of any issuer if any officer or trustee of the
Fund or any officer or director of Northstar owns more than 1/2 of 1% of the
outstanding securities of the issuer, and such officers, directors and trustees
own in the aggregate more than 5% of the securities of such issuer;
17. Invest in interests in oil, gas or other mineral exploration or
development programs (although it may invest in issuers that own or invest in
such interests);
18. Purchase securities of any investment company, except by purchase in
the open market where no commission or profit to a sponsor or dealer results
from such purchase, or except when such purchase, though not made in the open
market, is part of a plan of merger, consolidation, reorganization or
acquisition of assets;
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19. Purchase more than 3% of the outstanding voting securities of another
investment company, invest more than 5% of its total assets in another
investment company, or invest more than 10% of its total assets in other
investment companies;
20. Purchase warrants if, as a result, warrants taken at the lower of cost
or market value would represent more than 5% of the value of the Fund's net
assets or if warrants that are not listed on the New York or American Stock
Exchanges or on an exchange with comparable listing requirements, taken at the
lower of cost or market value, would represent more than 2% of the value of the
Fund's net assets (for this purpose, warrants attached to securities will be
deemed to have no value); or
21. Make short sales, unless, by virtue of its ownership of other
securities, the Fund has the right to obtain securities equivalent in kind and
amount to the securities sold and, if the right is conditional, the sale is made
upon the same conditions, except in connection with arbitrage transactions. The
Strategic Income Fund, additionally, may not invest in interests of real estate
limited partnerships.
In addition to the restrictions described above, each of these Funds may,
from time to time, agree to additional investment restrictions for purposes of
compliance with the securities laws of those state and foreign jurisdictions
where that Fund intends to offer or sell its shares.
INVESTMENT TECHNIQUES
DERIVATIVE INSTRUMENTS. The Funds may invest in Derivative Instruments (as
defined in the 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 subadviser will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Fund. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
FUTURES TRANSACTIONS -- IN GENERAL. The Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London International
Financial Futures Exchange and the Sydney Futures Exchange Limited. Foreign
markets may offer advantages such as trading opportunities or arbitrage
possibilities not 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
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little or no trading, thereby preventing prompt liquidation of futures positions
and potentially subjecting the Fund to substantial losses.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant market,
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if the Fund uses
futures to hedge against the possibility of a decline in the market value of
securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, the Fund may be required to segregate cash or high quality
money market instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting the Fund's ability otherwise to
invest those assets.
SPECIFIC FUTURES TRANSACTIONS. The Fund may purchase and sell stock index
futures contracts. A stock index future obligates the Fund to pay or receive an
amount of cash equal to a fixed dollar amount specified in the futures contract
multiplied by the difference between the settlement price of the contract on the
contract's last trading day and the value of the index based on the stock prices
of the securities that comprise it at the opening of trading in such securities
on the next business day.
The Fund may purchase and sell interest rate futures contracts. An interest
rate future obligates the Fund to purchase or sell an amount of a specific debt
security at a future date at a specific price.
The Fund may purchase and sell currency futures. A foreign currency future
obligates the Fund to purchase or sell an amount of a specific currency at a
future date at a specific price.
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.
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
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exercise price of the option. Thus, the effectiveness of purchasing or writing
stock index options will depend upon price movements in the level of the index
rather than the price of a particular stock.
The 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. A Fund may make short sales "against the box." A short-sale is
a transaction in which a party sells a security it does not own in anticipation
of decline in the market value of that security. A short sale is "against the
box" to the extent that the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short. When the Fund makes a short
sale, it must borrow the security sold short and deliver it to the broker-dealer
through which it made the short sale as collateral for its obligation to deliver
the security upon conclusion of the sale. The Fund may have to pay a fee to
borrow particular securities, and is often obligated to pay over any accrued
interest on such borrowed securities.
PRIVATELY ISSUED COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS, INTEREST
OBLIGATIONS AND PRINCIPAL OBLIGATIONS. Each of High Total Return Fund and Income
and Growth Fund may invest up to 5% of its net assets in Privately Issued
Collateralized Mortgage-Backed Obligations ("CMOs"), Interest Obligations
("IOs") and Principal Obligations ("POs") when Northstar believes that such
investments are consistent with the Fund's investment objective. Collateralized
mortgage obligations or "CMOs" are debt obligations collateralized by mortgage
loans or mortgage pass-through securities. Typically, privately issued CMOs are
collateralized by Ginnie Mae, Fannie Mae or Freddie Mac Certificates, but also
may be collateralized by whole loans or private pass-throughs (such collateral
collectively hereinafter referred to as "Mortgage Assets"). Privately issued
CMOs are per se illiquid. Multi-class pass-through securities are equity
interest in a trust composed of Mortgage Assets. Unless the context indicates
otherwise, all references herein to CMOs include multi-class pass-thorough
securities. Payments of principal of and interest on the Mortgage Assets, and
any reinvestment income thereon, are the source of funds used to pay debt
service on the CMOs or make scheduled distribution on the multi-class
pass-through securities.
On a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche", is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates. The principal of and interest on the Mortgage Assets may be allocated
among the several classes of a series of a CMO in innumerable ways. The Funds
may also invest in, among others, parallel pay CMOs and Planned Amortization
Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to provide payments
of principal on each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated maturity date or final
distribution date of each class, which, as with other CMO structures, must be
retired by its stated maturity date or final distribution date but may be
retired earlier. PAC Bonds generally call for payments of a specified amount of
principal on each payment date.
Stripped mortgage-backed securities ("SMBS") are derivative multi-class
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
Mortgage Assets. A common type of SMBS will have at least one class receiving
only a small portion of the interest and a larger portion of the principal from
the Mortgage Assets, while the other classes will receive primarily interest and
only a small portion of the principal. In the most extreme case, one class will
receive all of the interest (the interest-only or "IO" class), while the other
class will receive all of the principal (the principal-only or "PO" class). The
yield to maturity on an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying Mortgage Assets,
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and a rapid rate of principal payments may have a material adverse effect on
such security's yield to maturity. If the underlying Mortgage Assets experience
greater than anticipated prepayments of principal, a Fund may fail to recoup
fully its initial investment in these securities. The determination of whether a
particular government-issued IO or PO backed by fixed-rate mortgage is liquid is
made by Northstar under guidelines and standards established by the Board of
Trustees. Such a security may be deemed liquid if it can be disposed of promptly
in the ordinary course of business at a value reasonably close to that used in
the calculation of net asset value per share.
INDEX WARRANTS. The Strategic Income Fund may purchase put warrants and
call warrants whose values vary depending on the change in the value of one or
more specified securities indices ("index warrants"). Index warrants are
generally issued by banks or other financial institutions and give the holder
the right, at any time during the term of the warrant, to receive upon exercise
of the warrant a cash payment from the issuer, based on the value of the
underlying index at the time of exercise. In general, if the value of the
underlying index rises above the exercise price of the index warrant, the holder
of a call warrant will be entitled to receive a cash payment from the issuer
upon exercise, based on the difference between the value of the index and the
exercise price of the warrant; if the value of the underlying index falls, the
holder of a put warrant will be entitled to receive a cash payment from the
issuer upon exercise, based on the difference between the exercise price of the
warrant and the value of the index. The holder of a warrant would not be
entitled to any payments from the issuer at any time when, in the case of a call
warrant, the exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than the value of
the underlying index. If the Strategic Income Fund were not to exercise an index
warrant prior to its expiration, then the Fund would lose the amount of the
purchase price paid by it for the warrant. The Strategic Income Fund will
normally use index warrants in a manner similar to its use of options on
securities indices. The risks of the Fund's use of index warrants are generally
similar to those relating to its use of index options. Unlike most index
options, however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only by the credit of
the bank or other institution that issues the warrant. Also, index warrants
generally have longer terms than index options. Although the Strategic Income
Fund will normally invest only in exchange-listed warrants, index warrants are
not likely to be as liquid as certain index options backed by a recognized
clearing agency. In addition, the terms of index warrants may limit the Fund's
ability to exercise the warrants at such time, or in such quantities, as the
Fund would otherwise wish to do.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a
Fund buys a money market instrument and obtains a simultaneous commitment from
the seller to repurchase the instrument at a specified time and at an agreed
upon yield. Northstar will use standards set by the relevant Fund's Trustees in
reviewing the creditworthiness of parties to repurchase agreements with such
Fund. In addition, no more than an aggregate of 15% of a Fund's net assets, at
the time of investment, will be invested in illiquid investments, including
repurchase agreements having maturities longer than seven days. In the event of
failure of the executing bank or broker-dealer, a Fund could experience some
delay in obtaining direct ownership of the underlying collateral and might incur
a loss if the value of the security should decline, as well as costs in
disposing of the security.
Pursuant to an Exemptive Order under Section 17(d) and Rule 17d-1 obtained
by the Funds, excluding the Strategic Income Fund and the Northstar Trust, on
March 5, 1991, such Funds may deposit uninvested cash balances into a single
joint account to be used to enter into repurchase agreements.
As an alternative to using repurchase agreements, a Fund may, from time to
time, invest up to 5% of its assets in money market investment companies
sponsored by a third party for short-term liquidity purposes. Such investments
are subject to the non-fundamental investment limitations described herein.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLL AGREEMENTS. The Funds may
enter into reverse repurchase agreements and dollar roll agreements. Under a
reverse repurchase agreement or a dollar roll agreement, a Fund sells securities
and agrees to repurchase them, or substantially similar securities in the case
of a dollar roll agreement, at a mutually agreed upon date and price. At the
time the Fund enters into a reverse repurchase or dollar roll agreement, it will
establish and maintain a segregated account with its custodian, containing cash,
U.S. Government Securities, or other liquid assets from its portfolio, having a
value not less than the repurchase price (including accrued interest). The Funds
do not account for dollar rolls as a borrowing.
These agreements may involve the risk that the market value of the
securities to be repurchased by a Fund may decline below the price at which the
Fund is obligated to repurchase. Also, in the event the buyer of securities
under a reverse repurchase agreement or a dollar roll agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the Fund's
obligation to repurchase the securities, and the Fund's use of the proceeds of
the reverse repurchase agreement or the dollar roll agreement may effectively be
restricted pending such a decision.
LENDING PORTFOLIO SECURITIES. A Fund may lend portfolio securities to
broker-dealers and other financial institutions in an amount up to one-third of
the value of its total assets, provided that such loans are callable at any time
by the Fund and are at all
8
<PAGE>
times secured by collateral held by the Fund at least equal to the market value,
determined daily, of the loaned securities. A Fund will continue to receive any
income on the loaned securities, while simultaneously earning interest on cash
collateral (which will be invested in short-term debt obligations) or a
securities lending fee (in the case of collateral in the form of U.S. Government
Securities).
There may be risks of delay in recovery of the loaned securities and, in
some cases, loss of rights in the collateral should the borrower of the
securities fail financially. Loans of portfolio securities will only be made to
firms considered by Northstar to be creditworthy under guidelines adopted by the
Trustees.
FIRM COMMITMENTS AND WHEN-ISSUED SECURITIES. Each Fund, except the
Government Securities Fund, may enter into firm commitment agreements to
purchase securities at an agreed-upon price on a specified future date. An
amount of cash or short-term U.S. Government Securities equal to the Fund's
commitment will be deposited in a segregated account at the Fund's custodian
bank to secure the Fund's obligation. Although a Fund will generally enter into
firm commitments to purchase securities with the intention of actually acquiring
the securities for its portfolio (or for delivery pursuant to options
contracts it has entered into), the Fund may dispose of a security prior to
settlement if Northstar deems it advisable to do so. A Fund entering into the
forward commitment may realize short-term gains or losses in connection with
such sales.
A Fund may enter into To Be Announced ("TBA") sale commitments wherein the
unit price and the estimated principal amount are established upon entering into
the contract, with the actual principal amount being within a specified range of
the estimate. A Fund will enter into TBA sale commitments to hedge its portfolio
positions or to sell mortgage-backed securities it owns under delayed delivery
arrangements. Proceeds of TBA sale commitments are not received until the
contractual settlement date. During the time a TBA sale commitment is
outstanding, the Fund will maintain, in a segregated account, cash or high-grade
debt obligations in an amount sufficient to meet the purchase price. Unsettled
TBA sale commitments are valued at current market value of the underlying
securities. If the TBA sale commitment is closed through the acquisition of an
offsetting purchase commitment, the Fund realizes a gain or loss on the
commitment without regard to any unrealized gain or loss on the underlying
security. If the Fund delivers securities under the commitment, the Fund
realizes a gain or loss from the sale of the securities, based upon the unit
price established at the date the commitment was entered into.
A Fund may also purchase securities on a when-issued or delayed delivery
basis. In such transactions, the price is fixed at the time the commitment to
purchase is made, but delivery and payment for the securities take place at a
later date, normally within one month. The value of the security on the
settlement date may be more or less than the price paid as a result of, among
other things, changes in the level of interest rates or other market factors.
Accordingly, there is a risk of loss, which is in addition to the risk of
decline in the value of the Fund's other assets. The Fund will establish a
segregated account with its custodian in which it will maintain cash and
marketable securities equal in value to commitments for when-issued or delayed
delivery securities. While when-issued or delayed delivery securities may be
sold prior to the settlement date, it is intended that a Fund will purchase such
securities with the purpose of actually acquiring them, unless a sale appears
desirable for investment reasons.
FLOATING OR VARIABLE RATE INSTRUMENTS. The Funds may purchase floating or
variable rate bonds, which normally provide that the holder can demand payment
of the obligation on short notice at par with accrued interest. Such bonds are
frequently secured by letters of credit or other credit support arrangements
provided by banks. Floating or variable rate instruments provide for adjustments
in the interest rate at specified intervals (weekly, monthly, semiannually,
etc.). A Fund would anticipate using these bonds as cash equivalents, pending
longer term investment of its funds. Other longer term fixed-rate bonds, with a
right of the holder to request redemption at certain times (often annually,
after the lapse of an intermediate term), may also be purchased by a Fund. These
bonds are more defensive than conventional long-term bonds (protecting to some
degree against a rise in interest rates), while providing greater opportunity
than comparable intermediate term bonds since the Fund may retain the bond if
interest rates decline. By acquiring these kinds of bonds, a Fund obtains the
contractual right to require the issuer of the security, or some other person
(other than a broker or dealer), to purchase the security at an agreed upon
price, which right is contained in the obligation itself rather than in a
separate agreement with the seller or some other person.
ZERO COUPON SECURITIES. Zero coupon securities are fixed income securities
that have been stripped of their unmatured interest coupons. Zero coupon
securities are sold at a (usually substantial) discount and redeemed at face
value at their maturity date without interim cash payments of interest or
principal. The amount of this discount is accredited over the life of the
security, and the accretion constitutes the income earned on the security for
both accounting and tax purposes. Because of these features, the market prices
of zero coupon securities are generally more volatile than the market prices of
securities that have a similar maturity but that pay interest periodically. Zero
coupon securities are likely to respond to a greater degree to interest rate
changes than are non-zero coupon securities with similar maturity and credit
qualities. Each Fund may invest a portion of its total assets in "zero coupon"
Treasury securities, which consist of Treasury bills or stripped interest or
principal components of U.S. Treasury bonds or notes.
9
<PAGE>
Zero coupon Treasury bonds or notes consist of stripped interest or
principal components held in STRIPS form issued through the U.S. Treasury's
STRIPS program, which permits the beneficial ownership of the component to be
recorded directly in the Treasury book-entry system. The Funds may also purchase
custodial receipts evidencing beneficial ownership of direct interests in
component parts of U.S. Treasury bonds or notes held by a bank in a custodian or
trust account.
ADDITIONAL INFORMATION ON GNMAS. The Funds may invest in U.S. Government
Securities, which are obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities. A substantial portion of the assets of the
Government Securities Fund have, at various times, been invested in obligations
of the Government National Mortgage Association (popularly called GNMAs or
Ginnie Maes). All of the other Funds may also invest in GNMAs from time to time.
GNMAs are mortgage backed securities representing part ownership of a pool
of mortgage loans, in which the timely payment of principal and interest is
guaranteed by the full faith and credit of the U.S. Government. GNMA may borrow
U.S. Treasury funds to the extent needed to make payments under the guarantee.
The Funds purchase "modified pass-through" type GNMA Certificates for which
principal and interest are guaranteed, rather than the "straight pass through"
Certificates for which such guarantee is not available. The Funds also purchase
"variable rate" GNMA Certificates and may purchase other types that may be used
with GNMA's guarantee.
When mortgages in the pool underlying a GNMA Certificate are prepaid by
mortgagors or when foreclosure occurs, such principal payments are passed
through to the Certificate holders (such as a Fund). Accordingly, the life of
the GNMA Certificate is likely to be substantially shorter than the stated
maturity of the mortgages in the underlying pool, which will have maturities of
up to 30 years. Because of such variation in prepayment rights, it is not
possible to accurately predict the life of a particular GNMA Certificate.
Payments to holders of GNMA Certificates consist of the monthly
distributions of interest and principal, less the GNMA and issuer's fees. The
portion of the monthly payment that represents a return of principal may be
reinvested by a Fund holding the GNMA in then-available GNMA obligations, which
may bear interest at a rate higher or lower than the obligation from which the
payment was received, or in a differing security. The actual yield to be earned
by the holder of a GNMA Certificate is calculated by dividing such payments by
the purchase price paid for the GNMA Certificate (which may be at a premium or a
discount from the face value of the Certificate). Unpredictable prepayments of
principal, however, can greatly change realized yields. In a period of declining
interest rates it is more likely that mortgages contained in GNMA pools will be
prepaid, thus reducing the effective yield. Moreover, any premium paid on the
purchase of a GNMA Certificate will be lost if the obligation is prepaid. In
periods of falling interest rates, this potential for prepayment may reduce the
general upward price increase of GNMA Certificates that might otherwise occur.
As with other debt instruments, the price of GNMA Certificates is likely to
decrease in times of rising interest rates. Price changes of the GNMA
Certificates held by a Fund have a direct impact on the net asset value per
share of the Fund.
When interest rates rise, the value of a GNMA Certificate will generally
decline. Conversely, when rates fall, the GNMA Certificate value may rise,
although not as much as other debt issues, due to the prepayment feature. As a
result, the price per share the shareholder receives on redemption may be more
or less than the price paid for the shares. The dividends per share paid by the
Government Securities Fund may also vary.
ADDITIONAL INFORMATION ON FOREIGN SECURITIES. Each Fund, except Government
Securities Fund, may invest in securities of foreign issuers. Each of these
Funds other than Strategic Income, High Yield, and High Total Return may invest
up to 20% of its net assets in foreign securities, of which 10% of its net
assets may be invested in foreign securities that are not listed on a U.S.
securities exchange. Strategic Income may invest up to 60% of its assets in
securities of foreign issuers, High Total Return may invest up to 50% and High
Yield up to 35% of its total assets. Eurodollar certificates of deposit are
excluded for purposes of this limitation for Strategic Income.
ADDITIONAL INFORMATION ON HIGH YIELD SECURITIES. Balance Sheet
Opportunities Fund, Strategic Income Fund, High Yield Fund and High Total Return
Fund each may invest in lower-rated fixed income securities to the extent
described in the Prospectus. The lower ratings of certain securities held by
these Funds reflect a greater possibility that adverse changes in the financial
condition of the issuer or economic conditions in general, or both, or an
unanticipated rise in interest rates, may impair the ability of the issuer to
make payments of interest and principal. The inability (or perceived inability)
of issuers to make timely payment of interest and principal would likely make
the values of securities held by these Funds more volatile and could limit a
Fund's ability to sell its securities at prices approximating the values the
Fund had placed on such securities. In the absence of a liquid trading market
for the securities held by it, a Fund may be unable at times to establish the
fair value of such securities. The rating assigned to a security by Moody's
Investors Service, Inc. or S & P (or by any other nationally recognized
securities rating organization) does not reflect an assessment of the volatility
of the security's market value or the liquidity of an investment in the
security. See the Appendix to the Prospectus for a description of security
ratings.
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<PAGE>
Like those of other fixed income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. Thus, a decrease
in interest rates will generally result in an increase in the value of a Fund's
assets. Conversely, during periods of rising interest rates, the value of a
Fund's assets will generally decline. In addition, the values of such securities
are also affected by changes in general economic conditions and business
conditions affecting the specific industries of their issuers. Changes by
recognized rating services in their ratings of any fixed income security and in
the ability of an issuer to make payments of interest and principal may also
affect the value of these investments. Changes in the value of portfolio
securities generally will not affect cash income derived from such securities,
but will effect a Fund's net asset value. A Fund will not necessarily dispose of
a security when its rating is reduced below its rating at the time of purchase,
although Northstar will monitor the investment to determine whether its
retention will assist in meeting a Fund's investment objective.
Certain securities held by a Fund may permit the issuer at its option to
call, or redeem, its securities. If an issuer were to redeem securities held by
a Fund during a time of declining interest rates, the Fund may not be able to
reinvest the proceeds in securities providing the same investment return as the
securities redeemed.
LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Fund may invest in loan
participations and loan assignments. A Fund's investment in loan participations
typically will result in the Fund having a contractual relationship only with
the Lender and not with the borrower. The Fund will have the right to receive
payments of principal, interest and any fees to which it is entitled only from
the Lender selling the Participations and only upon receipt by the Lender of the
payments from the borrower. In connection with purchasing Participations, the
Fund generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the Loan, nor any right of set-off
against the borrower, and the Fund may not directly benefit from any collateral
supporting the Loan in which it has purchased the Participation. As a result,
the Fund may be subject to the credit risk of both the borrower and the Lender
that is selling the Participation. In the event of the insolvency of the Lender
selling a Participation, the Fund may be treated as a general creditor of the
Lender and may not benefit from any set-off between the Lender and the borrower.
When a Fund purchases a loan assignment from Lenders, it will acquire
direct rights against the borrowers on the Loan. Because Assignments are
arranged through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by the Fund as the
purchaser of an Assignment may differ from, and be more limited than, those held
by the assigning Lender. Because there is no liquid market for such securities,
the Funds anticipate that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market may have an
adverse impact on the value of such securities and a Fund's ability to dispose
of particular assignments or participations when necessary to meet redemptions
of Fund shares, to meet the Fund's liquidity needs or when necessary in response
to a specific economic event, such as deterioration in the creditworthiness of
the borrower. The lack of a liquid secondary market for assignments and
participations also may make it more difficult for a Fund to value these
securities for purposes of calculating its net asset value.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
Northstar, and Subadviser in the case of Special Fund and Growth + Value
Fund, places orders for the purchase and sale of the Funds' securities,
supervises their execution and negotiates brokerage commissions on behalf of
each Fund. For purposes of the remainder of this section, "Portfolio
Transactions and Brokerage Allocation," discussion of Northstar includes the
Subadviser, but only with respect to Special Fund and Growth + Value Fund. It is
the practice of Northstar to seek the best prices and best execution of orders
and to negotiate brokerage commissions that in the Adviser's opinion, are
reasonable in relation to the value of the brokerage services provided by the
executing broker. Brokers who have executed orders for the Funds are asked to
quote a fair commission for their services. If the execution is satisfactory and
if the requested rate approximates rates currently being quoted by the other
brokers selected by Northstar, the rate is deemed by Northstar to be reasonable.
Brokers may ask for higher rates of commission if all or a portion of the
securities involved in the transaction are positioned by the broker, if the
broker believes it has brought a Fund an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value and payment of such commissions is authorized by Northstar
after the transaction has been consummated. If Northstar more than occasionally
differs with the broker's appraisal of opportunity or value, the broker would
not be selected to execute trades in the future. Northstar believes that each
Fund benefits with a securities industry comprised of many and diverse firms and
that the longterm interest of shareholders of the Funds is best served by its
brokerage policies that include paying a fair commission, rather than seeking to
exploit its leverage to force the lowest possible commission rate.
Over-the-counter purchases and sales are transacted directly with principal
market-makers, except in those circumstances where, in the opinion of Northstar,
better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income
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<PAGE>
markets and equity markets, specific industry groups and individual
issues. Research services will vary from firm to firm, with broadest
coverage generally from the large full-line firms. Smaller firms, in
general, tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor federal,
state, local and foreign political developments; many of the brokers also
provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff, since the brokers, as a group, tend
to monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, the outside research provides Northstar with a
diverse perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to Northstar and is available for
the benefit of other accounts advised by Northstar and its affiliates; and not
all of this information will be used in connection with the Funds. While this
information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value, and, in the
opinion of Northstar, it does not reduce the Adviser's expenses by a
determinable amount. The extent to which Northstar makes use of statistical,
research and other services furnished by brokers is considered by Northstar in
the allocation of brokerage business, but there is no formula by which such
business is allocated. Northstar does so in accordance with its judgment of the
best interests of the Funds and their shareholders.
Purchases and sales of fixed income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to dealers
serving as market makers for the securities at a net price. Each Fund will also
purchase such securities in underwritten offerings and will, on occasion,
purchase securities directly from the issuer. Generally, fixed income securities
are traded on a net basis and do not involve brokerage commissions. The cost of
executing fixed income securities transactions consists primarily of dealer
spreads and underwriting commissions.
In purchasing and selling fixed income securities, it is the policy of each
Fund to obtain the best results, while taking into account the dealer's general
execution and operational facilities, the type of transaction involved and other
factors, such as the dealer's risk in positioning the securities involved. While
Northstar generally seeks reasonably competitive spreads or commissions, the
Funds will not necessarily pay the lowest spread or commission available.
Each Fund may, under circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer that has
provided statistical or other research services to the Funds. By allocating
transactions in this manner, Northstar is able to supplement its research and
analysis with the views and information of other securities firms. During the
fiscal years ended October 31, 1996 and December 31, 1996, respectively, each of
the Funds listed below paid the total brokerage commissions indicated below,
including, in the case of the Special, Growth, Balance Sheet Opportunities,
Government Securities, Strategic Income, and High Yield Funds, commissions to
Advest, Inc. ("Advest"), an affiliate of the Funds' former investment adviser.
BROKERAGE COMMISSIONS PAID DURING MOST RECENT FISCAL YEARS
<TABLE>
<CAPTION>
OCTOBER 31,
1996 1995
<S> <C> <C>
Income and Growth Fund................................................................... $507,638 $249,474
High Total Return Fund................................................................... $ 11,433 $ 0
<CAPTION>
DECEMBER 31,
1996 1995
Special Fund............................................................................. $479,135 $ 87,375
Growth Fund.............................................................................. $124,024 $241,864
Balance Sheet Opportunities Fund......................................................... $ 90,283 $ 88,151
Government Securities Fund............................................................... $ 1,049 $ 0
Strategic Income Fund.................................................................... $ 0 $ 552
High Yield Fund.......................................................................... $ 16,591 $ 12,763
</TABLE>
A change in securities held in the portfolio of a Fund is known as
"Portfolio Turnover" and may involve the payment by a Fund of dealer markups or
brokerage or underwriting commissions and other transaction costs on the sale of
securities, as well as on the reinvestment of the proceeds in other securities.
Portfolio turnover rate for a fiscal year is the percentage determined by
dividing the lesser of the cost of purchases or proceeds from sales of portfolio
securities by the average of the value of portfolio securities during such year,
all excluding securities whose maturities at acquisition were one year or less.
Each Fund cannot accurately predict its portfolio turnover rate, but Northstar
anticipates that each Fund's rate will not exceed 100% under normal market
conditions. A 100% annual turnover rate would occur, for example, if all the
securities in the portfolio were replaced once in a period of one year. A Fund's
portfolio turnover rate may be higher than that described above if a Fund finds
it necessary to significantly change its portfolio to adopt a temporary
defensive position or respond to economic or market events. A high
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<PAGE>
turnover rate would increase commission expenses and may involve realization of
gains that would be taxable to shareholders. The ability of a Fund to make
purchases and sales of securities and to engage in options and futures
transactions will be limited by certain requirements of the Code, including a
requirement that less than 30% of the Fund's annual gross income be derived from
gains on the sale of securities and certain other assets held for less than
three months.
SERVICES OF NORTHSTAR, THE SUBADVISERS AND THE ADMINISTRATOR
Pursuant to an Investment Advisory Agreement with each Fund, Northstar
Investment Management Corporation acts as the investment adviser to each Fund.
In this capacity, Northstar, subject to the authority of the Trustees of the
Funds, and subject to delegation of certain responsibilities to Navellier Fund
Management, Inc. as the subadviser for the Special Fund and the Growth + Value
Fund and Wilson/Bennett Capital Management, Inc. as the subadviser for the
Income and Growth Fund, is responsible for furnishing continuous investment
supervision to the Funds and is responsible for the management of each Fund's
portfolio.
Northstar is an indirect, majority-owned subsidiary of ReliaStar Financial
Corp. ("ReliaStar"). Combined minority interests in Northstar held by members of
senior management of ReliaStar currently equal 20%. ReliaStar is a publicly
traded holding company whose subsidiaries specialize in the life insurance
business. Through ReliaStar Life Insurance Company ("ReliaStar Life") and other
subsidiaries, ReliaStar issues and distributes individual life insurance and
annuities, group life and health insurance and life and health reinsurance, and
provides related investment management services. The address of Northstar is Two
Pickwick Plaza, Greenwich, Connecticut 06830. The address of ReliaStar is 20
Washington Avenue South, Minneapolis, Minnesota 55401.
Northstar charges a fee under each advisory agreement to Government
Securities Fund, High Yield Fund, Balance Sheet Opportunities Fund, Strategic
Income Fund, Growth Fund, Special Fund and Growth + Value Fund at an annual
rate, after voluntary waivers or expense reimbursements, of 0.45%, 0.45%, 0.65%,
0.65%, 0.75%, 0.75% and 1.00% of such Fund's average daily net assets,
respectively. This fee is accrued daily and payable monthly.
Northstar charges a fee to the Income and Growth Fund and High Total Return
Fund at the annual rate of 0.75% on the first $250,000,000 of aggregate average
daily net assets of each Fund, 0.70% on the next $250,000,000 of such assets,
0.65% on the next $250,000,000 of such assets; 0.60% on the next $250,000,000 of
such assets, and 0.55% on the remaining aggregate daily net assets of each Fund
in excess of $1 billion.
Northstar has agreed that if, in any fiscal year, the aggregate expenses of
a Fund, exclusive of taxes, distribution fees, brokerage, interest and (with the
prior consent of any necessary state securities commissions) extraordinary
expenses, but including the management fee, exceed the most restrictive expense
limitations applicable to the Fund under state securities laws or published
regulations thereunder, Northstar will refund on a proportionate basis to the
Fund whose expenses exceeded such limitation the excess over such amount up to
the total fee received by Northstar. Currently, the most restrictive of such
limitations would require Northstar to reimburse such a Fund to the extent that
in any fiscal year such aggregate expenses exceed 2.5% of the first $30,000,000
of the average net assets, 2.0% of the next $70,000,000 of the average net
assets and 1.5% of any amount of the average net assets in excess of
$100,000,000.
The Investment Advisory Agreement for the Income and Growth Fund and High
Total Return Fund was originally approved by the Trustees of the Northstar Trust
on October 23, 1993, and by the sole Shareholder of the Northstar Income and
Growth Fund, and High Total Return Fund on November 8, 1993. The Investment
Advisory Agreement continued in effect for a period of two years and was renewed
by the Trustees for one year on October 31, 1995. It will continue in effect
from year to year if specifically approved annually by (a) the Trustees, acting
separately on behalf of each Fund, including a majority of the Disinterested
Trustees, or (b) a majority of the outstanding voting securities of each class
of each Fund as defined in the 1940 Act.
The Investment Advisory Agreement for the Growth + Value Fund was approved
by the Trustees on July 31, 1996. The Investment Advisory Agreement will
continue in effect for a period of two years and annually thereafter if
specifically approved annually by (a) the Trustees, acting separately on behalf
of the Fund, including a majority of the Disinterested Trustees, or (b) a
majority of the outstanding voting securities of each class of the Fund as
defined in the 1940 Act.
Each Investment Advisory Agreement for the remaining Funds was approved by
the Trustees of the affected Fund on March 1, 1995 and by the shareholders of
such Fund on June 2, 1995. Each such Investment Advisory Agreement will continue
in effect until June 2, 1997, and thereafter, will continue in effect from year
to year if specifically approved annually by (a) the Trustees, acting separately
on behalf of the particular Fund, including a majority of the Disinterested
Trustees, or (b) a majority of the outstanding voting securities of each class
of such Fund as defined in the 1940 Act.
A Fund's Investment Advisory Agreement may be terminated as to any class,
without penalty and at any time, by a similar vote upon not more than 60 days'
nor less than 30 days' written notice by Northstar, the Trustees, or a majority
of the outstanding
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voting securities of such class of such Fund as defined in the 1940 Act.
Such agreement will automatically terminate in the event of its assignment,
as defined in Section 2(a)(4) of the 1940 Act.
Pursuant to separate Subadvisory Agreements between Northstar and Navellier
Fund Management, Inc., dated February 1, 1996, and July 31, 1996, Navellier acts
as subadviser to Special Fund and Growth + Value Fund, respectively. In this
capacity, Navellier Fund Management, Inc., subject to the supervision and
control of Northstar and the Trustees of such Funds, will manage the Funds'
portfolio investments, consistently with their investment objective, and will
execute any of the Funds' investment policies that it deems appropriate to
utilize from time to time. Fees payable under the Subadvisory Agreement will
accrue daily and be paid monthly by Northstar. As compensation for its services,
Northstar will pay the Subadviser at the annual rate of 0.48% and 0.64% of the
average daily net assets of Special Fund and Growth + Value Fund, respectively.
The Subadviser is wholly-owned and controlled by its sole stockholder, Louis G.
Navellier. The Subadviser's address is: 1 East Liberty, Third Floor, Reno,
Nevada, 89501. The Subadvisory Agreement for Special Fund was approved by the
Trustees of the Fund on December 1, 1995, and by vote of the Shareholders of the
Fund on January 30, 1996. The Subadvisory Agreement for Growth + Value Fund was
approved by the Trustees of the Fund on July 31, 1996. Each Subadvisory
Agreement may be terminated without payment of any penalty by Northstar,
Navellier, the Trustees of such Fund, or the shareholders of such Fund on not
more than 60 days' and not less than 30 days' prior written notice. Otherwise,
each Subadvisory Agreement will remain in effect for two years and will,
thereafter, continue in effect from year to year, subject to the annual approval
of the Trustees of the applicable Fund, or the vote of a majority of the
outstanding voting securities of such Fund, and the vote, cast in person at a
meeting duly called and held, of a majority of the Trustees of such Fund who are
not parties to the Subadvisory Agreement or "interested persons" (as defined in
the 1940 Act) of any such Party.
Wilson/Bennett Capital Management, Inc. ("Wilson/Bennett"), serves as
subadviser with respect to the common stock portion of the Income and Growth
Fund pursuant to a Subadvisory Agreement dated July 31, 1996 between Northstar
and Wilson/Bennett. Northstar will make all determinations as to the allocation
of the Fund's assets, will direct all trades and will manage the portion of the
Fund's assets in convertible and fixed income securities. Wilson/Bennett's
principal address is Suite 250, 8260 Greensboro Drive, McLean, Virginia 22102.
Wilson/Bennett currently manages approximately $111 million of assets for
individuals, pension plans and corporations. For its services, Wilson/Bennett
will receive from Northstar, not the Funds, a monthly fee at an annual rate
equal to 0.20% of the first $125 million of average daily net assets of the Fund
managed by Wilson/Bennett, 0.25% of the next $125 million, and 0.30% for assets
in excess of $250 million. The Subadvisory Agreement for Income and Growth Fund
was approved by the Trustees of the Fund on April 25, 1996 , and by vote of the
shareholders of the Fund on July 15, 1996. The Subadvisory Agreement may be
terminated without payment of any penalty by Northstar, Wilson/Bennett, the
Trustees of the Fund, or the shareholders of the Fund on not more than 60 days'
and not less than 30 days' prior written notice. Otherwise, the Subadvisory
Agreement will remain in effect for two years and will, thereafter, continue in
effect from year to year, subject to the annual approval of the Trustees of the
Fund, or the vote of a majority of the outstanding voting securities of the
Fund, and the vote, cast in person at a meeting duly called and held, of a
majority of the Trustees of the Fund who are not parties to the Subadvisory
Agreement or "interested persons" (as defined in the 1940 Act) of any such
Party.
Northstar Administrators Corporation serves as administrator for the Funds,
pursuant to an Administrative Services Agreement with each Fund. Subject to the
supervision of the Board of Trustees, the Administrator provides the overall
business management and administrative services necessary to the proper conduct
of the Funds' business, except for those services performed by Northstar under
the Investment Advisory Agreements, the custodian for the Funds under the
Custodian Agreements, the transfer agent for the Funds under the Transfer Agency
Agreements, and such other service providers as may be retained by the Funds
from time to time. The Administrator acts as liaison among these service
providers to the Funds. The Administrator is also responsible for ensuring that
the Funds operate in compliance with applicable legal requirements and for
monitoring Northstar for compliance with requirements under applicable law and
with the investment policies and restrictions of the Funds. The Administrator is
an affiliate of Northstar. The address of the Administrator is: Two Pickwick
Plaza, Greenwich, Connecticut 06830.
The Administrative Services Agreement was approved by the Trustees of the
Trust on behalf of the Income and Growth Fund and High Total Return Fund on
October 23, 1993, and continued in effect for a period of two years. The
Agreement was renewed by the Trustees for one year on October 31, 1995 and will
continue in effect from year to year thereafter, provided such continuance is
approved annually by a majority of the Trustees of the Trust. The
Administrator's fee is accrued daily against the value of each Fund's net assets
and is payable by each Fund monthly at an annual rate of .10% of each Fund's
average daily net assets. In addition, the Administrator charges an annual
account fee of $5.00 for each account of beneficial owners of shares in a Fund
for providing certain shareholder services and assisting brokerdealer
shareholder accounts.
Each Administrative Services Agreement for the remaining Funds was approved
by the Trustees of the particular Fund on March 1, 1995. The Agreements provide
that until June 2, 1997, the Administrator will not receive any compensation
under such agreements and thereafter shall receive such compensation as the
Board of Trustees of the Funds may determine. The Agreements
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<PAGE>
will continue in effect until June 2, 1997, and from year to year thereafter,
provided such continuance is approved annually by a majority of the
Disinterested Trustees of the affected Fund.
During the fiscal years ended October 31, 1996 and 1995, the Funds listed
below paid Northstar and the Administrator the following investment advisory and
administrative fees, respectively:
TOTAL ADVISORY AND ADMINISTRATIVE FEES PAID
DURING FISCAL YEAR ENDED OCTOBER 31,
<TABLE>
<CAPTION>
1996 1996 1995 1995
ADVISORY FEES ADMIN. FEE ADVISORY FEE ADMIN. FEE
<S> <C> <C> <C> <C>
Income and Growth............................................... $ 1,548,967 $206,529 $1,158,432 $154,457
High Total Return Fund.......................................... 2,639,662 359,978 941,310 125,508
</TABLE>
Prior to June 5, 1995, the Special, Growth, Balance Sheet Opportunities,
Government Securities, Strategic Income and High Yield Funds were managed by
Boston Security Counselors, Inc. ("BSC") and did not utilize the services of an
administrator. During the fiscal years ended December 31, 1996, 1995, 1994 and
1993, the Funds listed below paid Northstar or BSC the following investment
advisory fees:
TOTAL ADVISORY FEES PAID
DURING FISCAL YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Special Fund (3)....................................................... 1,146,789 287,311(2) 268,139 145,178
Growth Fund (3)........................................................ 575,383 593,282 604,576 517,203
Balance Sheet Opportunities Fund (3)................................... 464,088 477,095 519,729 447,631
Government Securities Fund (1)(3)...................................... 923,929 678,996 747,846 767,370
Strategic Income Fund (3).............................................. 532,941 252,201 57,726 0
High Yield............................................................. 941,594 683,323 622,761 432,063
</TABLE>
(1) Net of waiver of investment advisory fees of $284,286, $301,776, $332,370
and $341,054 for the years ended December 31, 1996, 1995, 1994 and 1993,
respectively.
(2) Does not reflect expense reimbursement of $733.
(3) Does not reflect expense reimbursement of $20,615 for the Special Fund,
$34,126 for the Growth Fund, $41,925 for the Balance Sheet Opportunities
Fund, $15,175 for the Government Securities Fund, and $65,578 for the
Strategic Income Fund for the year ended December 31, 1996 and $57,336 for
the Strategic Income Fund for the year ended December 31, 1995.
NET ASSET VALUE
For each Fund in the Northstar Trust, equity securities are valued at the
last sale price on the exchange or in the principal OTC market in which such
securities are being valued, or lacking any sales, at the last available bid
price. Prices of long-term debt securities are valued on the basis of last
reported sales price, or if no sales are reported, the value is determined based
upon the mean of representative quoted bid or asked prices for such securities
obtained from a quotation reporting system or from established market makers, or
at prices for securities of comparable maturity, quality and type. For the
Northstar Special, Growth, Balance Sheet Opportunities, Government Securities,
Strategic Income and High Yield Funds, portfolio securities, options and futures
contracts and options thereon that are traded on national exchanges or in the
NASDAQ System are valued at the last sale or settlement price on the exchange or
market where primarily traded or, if none that day, at the mean of the last
reported bid and asked prices, using prices as of the close of trading on the
applicable exchange or market. Securities and options that are traded in the otc
market (other than on the NASDAQ System) are valued at the mean of the last
available bid and asked prices. Such valuations are based on quotations of one
or more dealers that make markets in the securities as obtained from such
dealers or from a pricing service. Securities (including OTC options) for which
market quotations are not readily available (which may constitute a major
portion of the High Yield Fund's portfolio) and other assets are valued at their
fair value as determined by or under the direction of the Trustees. Such fair
value may be determined by various methods, including utilizing information
furnished by pricing services that determine calculations for such securities
using methods based, among other things, upon market transactions for comparable
securities and various relationships between securities that are generally
recognized as relevant.
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<PAGE>
The net asset value of each Fund's shares fluctuates and is determined
separately for each class as of the close of regular trading on the New York
Stock Exchange (currently 4:00 p.m. EST), on each business day that the Exchange
is open. Net asset value per share is computed by determining the value of a
Fund's assets (securities held plus cash and other assets, including dividend
and interest accrued but not received) less all liabilities of the Fund
(including accrued expenses other than class specific expenses), and dividing
the result by the total number of shares outstanding at such time. The specific
expenses borne by each class of shares will be deducted from that class and will
result in different net asset values and dividends. The net asset value per
share of the Class B, Class C and Class T shares of each Fund will generally be
lower than that of the Class A or Class I shares because of the higher
classspecific expenses borne by each of the Class B, Class C and Class T shares.
Under normal market conditions, daily prices for securities are obtained from
independent pricing services, determined by them in accordance with the
registration statement for each Fund. Securities are valued at market value or,
if a market quotation is not readily available, at their fair value, determined
in good faith under procedures established by and under the supervision of the
Trustees. Money market instruments maturing within 60 days are valued using the
amortized cost method of valuation. This involves valuing a security at cost on
the date of acquisition and thereafter assuming a constant accretion of a
discount or amortization of a premium to maturity, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price a Fund
would receive if it sold the instrument. See "How Net Asset Value is Determined"
in the Prospectus.
PURCHASES AND REDEMPTIONS
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are not subject to a frontend or contingent deferred
sales load. There is no sales charge for qualified persons. "Qualified Persons"
are the following (a) active or retired Trustees, Directors, Officers, Partners
or Employees (including immediate family) of (i) Northstar or any of its
affiliated companies, (ii) the Funds or any Northstar affiliated investment
company or (iii) dealers having a sales agreement with the Underwriter, (b)
trustees or custodians of any qualified retirement plan or IRA established for
the benefit of a person in (a) above; (c) dealers, brokers or registered
investment advisers that have entered into an agreement with the Underwriter
providing for the use of shares of the Funds in particular investment products
such as "wrap accounts" or other similar managed accounts for the benefit of the
clients of such brokers, dealers and registered investment advisers, and (d)
pension, profit sharing or other benefit plans created pursuant to a plan
qualified under Section 401 of the Code or plans under Section 457 of the Code,
provided that such shares are purchased by an employer sponsored plan with at
least 50 eligible employees and (e) service providers of (i) Northstar or any
of its affiliated companies or (ii) the Funds or any Northstar affiliated
investment company. Class A shares of the Funds may be purchased at
net asset value, through a dealer, where the amount invested represents
redemption proceeds from another open-end fund sold with a sales load and
the same or similar investment objective, and PROVIDED the following
conditions are met: such redemption occurred no more than 60 days prior
to the purchase of shares of a Northstar Fund, the redeemed shares were
held for at least six months prior to redemption, and the proceeds of
the redemption are sent directly to Northstar or its agent, or maintained
in cash or a money market fund. No commissions will be paid to dealers
in connection with such purchases. There is also no initial sales charge
for "Purchasers" (defined below) if the initial amount invested in the Funds is
at least $1,000,000 or the Purchaser signs a $1,000,000 Letter of Intent, as
hereinafter defined.
REDUCED SALES CHARGES ON CLASS A SHARES. Investors choosing the initial
sales alternative may under certain circumstances be entitled to pay reduced
sales charges. The sales charge varies with the size of the purchase and reduced
charges apply to the aggregate of purchases of a Fund made at one time by any
"Purchaser," which term includes (i) an individual and his/her spouse and their
children under the age of 21, (ii) a trustee or fiduciary purchasing for a
single trust, estate or single fiduciary account (including IRAs, pension,
profit-sharing or other employee benefit trusts created pursuant to a plan
qualified under Section 401 of the Code, a Simplified Employee Pension ("SEP"),
Salary Reduction and other Elective Simplified Employee Pension Accounts
("SARSEP")) and 403(b) and 457 plans, although more than one beneficiary or
participant is involved; and (iii) any other organized group of persons, whether
incorporated or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase at a discount of
redeemable securities of a registered investment company. The circumstances
under which "Purchasers" may pay reduced sales charges are described in the
Prospectus.
REDEMPTIONS. The right to redeem shares may be suspended and payment
therefor postponed during periods when the New York Stock Exchange is closed,
other than customary weekend and holiday closings, or, if permitted by rules of
the sec, during periods when trading on the Exchange is restricted, or during
any emergency that makes it impracticable for any Fund to dispose of its
securities or to determine fairly the value of its net assets or during any
other period permitted by order of the sec for the protection of investors.
Furthermore, the Transfer Agent will not mail redemption proceeds until checks
received for shares purchased have cleared, but payment will be forwarded
immediately upon the funds becoming available. Class B, Class C and Class T
shareholders will be subject to the applicable deferred sales charge, if any,
for their shares at the time of redemption.
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<PAGE>
The contingent deferred sales load will be waived with respect to Class T
shares in the following instances: (i) any partial or complete redemption of
shares of a shareholder who dies or becomes disabled, so long as the redemption
is requested within one year of death or the initial determination of
disability; (ii) any partial or complete redemption in connection with
distributions under Individual Retirement Accounts ("IRAS") or other qualified
retirement plans in connection with a lumpsum or other form of distribution
following retirement within the meaning of Section 72(t)(2)(A)(iv) or (v) of the
Code, disability or death, or after attaining the age of 59 1/2 in the case of
an IRA, Keogh Plan or custodial account pursuant to Section 403(b)(7) of the
Code, or on any redemption that results from a taxfree return of an excess
contribution pursuant to Section 408(d)(4) or (5) of the Code or Section 4979(f)
of the Code; (iii) redemptions effected pursuant to the Funds' right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than $500; (iv) redemptions effected by (A)
employees of The Advest Group, Inc. ("AGI") and its subsidiaries, (B) IRAs,
Keogh plans and employee benefit plans for those employees, and (C) spouses and
minor children of those employees, so long as orders for shares are placed on
behalf of the spouses or children by the employees; (v) redemptions effected by
accounts managed by investment advisory subsidiaries of agi registered under the
Investment Advisers Act of 1940; and (vi) redemptions in connection with
exchanges of Fund Class T shares, including shares of the Class T account of the
Money Market Portfolio.
EXCHANGES. The following conditions must be met for all exchanges among the
Funds and the Money Market Portfolio: (i) the shares that will be acquired in
the exchange (the "Acquired Shares") are available for sale in the shareholder's
state of residence; (ii) the Acquired shares will be registered to the same
shareholder account as the shares to be surrendered (the "Exchanged Shares");
(iii) the Exchanged Shares must have been held in the shareholder's account for
at least 30 days prior to the exchange; (iv) except for exchanges into the Money
Market Portfolios, the account value of the Fund whose shares are to be acquired
must equal or exceed the minimum initial investment amount required by that Fund
after the exchange is implemented; and (v) a properly executed exchange request
has been received by the Transfer Agent.
Each Fund reserves the right to delay the actual purchase of the Acquired
Shares for up to five business days if it determines that it would be
disadvantaged by an immediate transfer of proceeds from the redemption of
Exchanged Shares. Normally, however, the redemption of Exchanged Shares and the
purchase of Acquired Shares will take place on the day that the exchange request
is received in proper form. Each Fund reserves the right to terminate or modify
its exchange privileges at any time upon prominent notice to shareholders. Such
notice will be given at least 60 days in advance. It is the policy of Northstar
to discourage and prevent frequent trading by shareholders among the Funds in
response to market fluctuations. Accordingly, in order to maintain a stable
asset base in each Fund and to reduce administrative expenses borne by each
Fund, Northstar generally restricts shareholders to a maximum of six exchanges
out of a Fund each calendar year. If a shareholder exceeds this limit, future
exchange requests may be denied.
CONVERSION FEATURE. Class B shares of each Fund will automatically convert
to Class A shares without a sales charge at the relative net asset values of
each of the classes after eight years from the acquisition of the Class B
shares, and as a result, will thereafter be subject to the lower distribution
fee (but same service fee) under the Class A Rule 12b-1 plan for each Fund.
Class T Shares convert to Class A shares at the end of the month that is the
later of (i) eight years after the Class T Shares were purchased or (ii) June 2,
1998.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to so qualify, the Fund must, among
other things, (i) derive each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to certain securities loans, gains
from the sale of securities or foreign currencies, or other income (including
but not limited to gains from options, futures or forward contracts) derived
with respect to its business of investing in stock, securities or currencies;
(ii) derive less than 30% of its gross income each taxable year from the sale or
other disposition of certain assets, including securities, held for less than
three months (the "30% Limitation"); and (iii) at the end of each quarter of the
taxable year maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment companies, and
other securities of issuers that represent, with respect to each issuer, no more
than 5% the value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and with no more than 25% of its assets invested in
the securities (other than those of the U.S. Government or other regulated
investment companies) of any one issuer or of two or more issuers that the Fund
controls and that are engaged in the same, similar or related trades and
businesses. As a regulated investment company, each Fund generally will not be
subject to federal income tax on its income and gains that it distributes to
shareholders, if at least 90% of its investment company taxable income (which
includes dividends, interest and the excess of any short-term capital gains over
long-term capital losses) for the taxable year is distributed.
17
<PAGE>
An excise tax at the rate of 4% will be imposed on the excess, if any, of a
Fund's "required distribution" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of a Fund's ordinary income for
the calendar year plus 98% of its capital gain net income recognized during the
one-year period ending on October 31 plus undistributed amounts from prior
years. Each Fund intends to make distributions sufficient to avoid imposition of
the excise tax. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by the Fund during October, November or
December of the year with a record date in such a month and paid by the Fund
during January of the following year. Such distributions will be taxable as if
received on December 31 in the year they are declared by the Fund, rather than
the year in which they are received.
The taxation of equity options and OTC options on debt securities is
governed by Code section 1234. Pursuant to Code section 1234, the premium
received by a Fund for selling a put or call option is not included in income at
the time of receipt. If the option expires, the premium is short-term capital
gain to the Fund. If the Fund enters into a closing transaction, the difference
between the amount paid to close out its position and the premium received is
short-term capital gain or loss. If a call option written by a Fund is
exercised, thereby requiring the Fund to sell the underlying security, the
premium will increase the amount realized upon the sale of such security and any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term depending upon the holding period of the security. With respect to a
put or call option that is purchased by a Fund, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the option is exercised, the
cost of the option, in the case of a call option, is added to the basis of the
purchased security and, in the case of a put option, reduces the amount realized
on the underlying security in determining gain or loss.
Certain options, futures contracts and forward contracts in which a Fund
may invest are "section 1256 contracts." Gains or losses on section 1256
contracts are generally considered 60% long-term and 40% short-term capital
gains or losses ("60/40 gains or losses"); however, foreign currency gains or
losses (as discussed below) arising from certain section 1256 contracts may be
treated as ordinary income or loss. Also, section 1256 contracts held by a Fund
at the end of each taxable year (and, generally, for purposes of the 4% excise
tax, on October 31 of each year) are treated as sold on such date at fair market
value, resulting in unrealized gains or losses being treated as though they were
realized.
Hedging transactions undertaken by a Fund may result in straddles for U.S.
federal income tax purposes. The straddle rules may accelerate income to a Fund,
defer losses to a Fund, and affect the character of gains (or losses) realized
by a Fund. Hedging transactions may increase the amount of short-term capital
gain realized by a Fund that is taxed as ordinary income when distributed to
shareholders. A Fund may make one or more of the various elections available
under the Code with respect to hedging transactions. If a Fund makes any of the
elections, the amount, character and timing of the recognition of gains or
losses from the affected positions will be determined under rules that vary
according to the elections made. The 30% limitation may limit the extent to
which a Fund will be able to engage in transactions in options, futures
contracts and forward contracts.
Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time a Fund accrues interest or other receivables,
or accrues expenses or other liabilities, denominated in a foreign currency and
the time the Fund actually collects such receivables, or pays such liabilities,
generally are treated as ordinary income or ordinary loss. Similarly, on
disposition of debt securities denominated in a foreign currency and certain
options, futures and forward contracts, gains or losses attributable to
fluctuations in the value of foreign currency between the date of acquisition
of the security or contract and the date of disposition also are treated
as ordinary gain or loss. These gains or losses, referred to under the
Code as "section 988" gains or losses, may increase or decrease the amount of a
Fund's investment company taxable income to be distributed to its shareholders
as ordinary income.
A Fund will not realize gain or loss on a short sale of a security until it
closes the transaction by delivering the borrowed security to the lender. All or
a portion of any gain arising from a short sale may be treated as short-term
capital gain, regardless of the period for which he Fund held the security used
to close the short sale. In addition, the Fund's holding period for any security
that is substantially identical to that which is sold short may be reduced or
eliminated as a result of the short sale.
Investments by a Fund in zero coupon securities will result in income to
the Fund equal to a portion of the excess of the face value of the securities
over their issue price (the "original issue discount") each year that the
securities are held, even though the Fund receives no cash interest payments.
This income is included in determining the amount of income that the Fund must
distribute to maintain its status as a regulated investment company and to avoid
the payment of federal income tax and the 4% excise tax. If a Fund invests in
certain high yield original issue discount obligations issued by corporations, a
portion of the original issue discount accruing on the obligations may be
eligible for the deduction for dividends received by corporations. In
18
<PAGE>
such event, a portion of the dividends of investment company taxable income
received from the Fund by its corporate shareholders may be eligible for this
deduction.
Gain derived by a Fund from the disposition of any market discount bonds
(i.e., bonds purchased other than at original issue, where the face value of the
bonds exceeds their purchase price) held by the Fund will be taxed as ordinary
income to the extent of the accrued market discount on the bonds, unless the
Fund elects to include the market discount in income as it accrues.
If a Fund invests in stock of certain foreign corporations that generate
largely passive investment-type income, or which hold a significant percentage
of assets that generate such income (referred to as "passive foreign investment
companies" or "PFICs"), these investments would be subject to special tax rules
designed to prevent deferral of U.S. taxation of the Fund's share of the PFIC's
earnings. In the absence of certain elections to report these earnings on a
current basis, regardless of whether the Fund actually receives any
distributions from the PFIC, investors in the Fund would be required to report
certain "excess distributions" from, and any gain from the disposition of stock
of, the PFIC as ordinary income. This ordinary income would be allocated ratably
to the Fund's holding period for the stock. Any amounts allocated to prior years
would be taxable at the highest rate of tax applicable in that year, increased
by an interest charge determined as though the amounts were underpayments of
tax.
Income received by the Funds from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. If more than
50% of the value of a Fund's total assets at the close of its taxable year
consists of securities of foreign corporations, the Fund will be eligible and
may elect to "pass through" to the Fund's shareholders the amount of foreign
taxes paid by the Fund. Pursuant to this election, a shareholder will be
required to include in gross income (in addition to dividends actually received)
its pro rata share of the foreign taxes paid by the Fund, and may be entitled
either to deduct its pro rata share of the foreign taxes in computing its
taxable income or to use the amount as a foreign tax credit against its U.S.
Federal income tax liability, subject to limitations. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year whether the
foreign taxes paid by the Fund will "pass through" for that year. If a Fund is
not eligible to make the election to "pass through" to its shareholders its
foreign taxes, the foreign taxes it pays will reduce its investment company
taxable income and distributions by the Fund will be treated as U.S. source
income.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to its foreign source
taxable income. For this purpose, if the pass-through election is made, the
source of the Fund's income flows through to its shareholders. With respect to
the Funds, gains from the sale of securities will be treated as derived from
U.S. sources and certain currency fluctuation gains, including fluctuation gains
from foreign currency denominated debt securities, receivables and payables, and
options, futures and forward transactions, will be treated as ordinary income
derived from U.S. sources. The limitation on the foreign tax credit is applied
separately to foreign source passive income (as defined for purposes of the
foreign tax credit), including the foreign source passive income passed through
by the Funds.
The current position of the Internal Revenue Service (the "IRS") generally
is to treat a regulated investment company, such as the Special Fund, as owning
its proportionate share of the income and assets of any partnership in which it
is a partner, in applying the 90% qualifying income requirement, the 30%
Limitation and the asset diversification requirements that, as described above,
each Fund must satisfy to qualify as a regulated investment company under the
Code. These requirements may limit the extent to which the Special Fund may
invest in limited partnerships, especially in the case of limited partnerships
that do not primarily invest in a diversified portfolio of stocks and
securities.
Dividends paid out of a Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. If a portion of a Fund's
income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Fund may be eligible for the corporate dividends-received
deduction. Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses), if any, designated as capital
gain dividends are taxable as long-term capital gains, regardless of how long
the shareholder has held the Fund's shares, and are not eligible for the
dividends-received deduction. Shareholders receiving distributions in the form
of additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net asset value of a share of the relevant Fund on the
reinvestment date. A distribution of an amount in excess of a Fund's current and
accumulated earnings and profits will be treated by a shareholder as a return of
capital that is applied against and reduces the shareholder's basis in his or
her shares. To the extent that the amount of any such distribution exceeds the
shareholder's basis in his or her shares, the excess will be treated by the
shareholder as gain from a sale or exchange of the shares. Shareholders will be
notified annually as to the U.S. federal tax status of distributions, and
shareholders receiving distributions in the form of additional shares will
receive a report as to the net asset value of those shares.
Upon the sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss that will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares. Any loss
realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30 days before and
19
<PAGE>
ending 30 days after disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received by the
shareholder with respect to such shares.
Under certain circumstances, the sales charge incurred in acquiring shares
of a Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of a Fund originally
acquired with a sales charge are disposed of within 90 days after the date on
which they were acquired and new shares of a regulated investment company are
acquired without a sales charge or at a reduced sales charge. In that case, the
gain or loss realized on the disposition will be determined by excluding from
the tax basis of the shares all or a portion of the sales charge incurred in
acquiring those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced as
a result of the shareholder having incurred a sales charge paid for the new
shares. This rule may be applied to successive acquisitions of shares of stock.
Distributions by a Fund reduce the net asset value of that particular
Fund's shares. Should a distribution reduce the net asset value of a share below
a shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from a Fund ("backup withholding") at the rate
of 31%. Corporate shareholders and certain other shareholders specified in the
Code generally are exempt from such backup withholding. Generally, shareholders
subject to backup withholding will be (i) those for whom a certified taxpayer
identification number is not on file with a Fund, (ii) those about whom
notification has been received (either by the shareholder or by a Fund) from the
IRS that they are subject to backup withholding or (iii) those who, to a Fund's
knowledge, have furnished an incorrect taxpayer identification number.
Generally, to avoid backup withholding, an investor must, at the time an account
is opened, certify under penalties of perjury that the taxpayer identification
number furnished is correct and that he or she is not subject to backup
withholding.
The foregoing discussion relates solely to U.S. Federal income tax law.
Dividends and distributions also may be subject to state, local and foreign
taxes. Dividends paid by a Fund from income attributable to interest on
obligations of the U.S. Government and certain of its agencies and
instrumentalities may be exempt from state and local taxes in certain states.
Shareholders should consult their tax advisers regarding the possible exclusion
of this portion of their dividends for state and local tax purposes. Non-U.S.
investors also should consult their tax advisers concerning the tax consequences
of ownership of shares of a Fund, including the possibility that distributions
may be subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty).
Shareholders of Class A, Class B and Class C shares may direct that income
dividends and capital gain distributions be paid to them through various options
listed in the "Dividends and Distributions Reinvestment Options" section of the
Funds' current Prospectus. If a shareholder selects either of two such options
(that: (a) income dividends be paid in cash and capital gain distributions be
paid in additional shares of the same class of a designated Fund at net asset
value; or (b) income dividends and capital gain distributions both be paid in
cash), and the dividend/distribution checks cannot be delivered, or, if such
checks remain uncashed for six months, each Fund reserves the right to
reinvest the dividend or distribution in the shareholder's account at the
then-current net asset value and to convert the shareholder's election to
automatic reinvestment in shares of the Fund from which the distributions
were made. Each Fund has received from the IRS, rulings to the effect that
(i) the implementation of the multiple class purchase arrangement will not
result in a Fund's dividends or distributions constituting "preferential
dividends" under the Code, and (ii) that any conversion feature associated
with a class of shares does not constitute a taxable event under federal
income tax law.
UNDERWRITER AND DISTRIBUTION SERVICES
Pursuant to Underwriting Agreements, Northstar Distributors, Inc. is the
Underwriter for each Fund and as such conducts a continuous offering pursuant to
a "best efforts" arrangement requiring it to take and pay for only such
securities as may be sold to the public. The Underwriter is an affiliate of the
Adviser and the Administrator.
The Underwriting Agreements may be terminated at any time on not more than
60 days' written notice, without payment of a penalty, by the Underwriter, by
vote of a majority of the outstanding class of voting securities of the affected
Fund, or by vote of a
20
<PAGE>
majority of the Trustees of such Fund, who are not "interested persons"
of the Fund and who have no direct or indirect financial interest in
the operation of the Plan or in any agreements. The Underwriting Agreements
will terminate automatically in the event of their assignment.
In addition to the amount paid to dealers pursuant to the sales charge
table in the Prospectus, the Underwriter from time to time pays, from its own
resources or pursuant to the Plans, a bonus or other incentive to dealers (other
than the Underwriter) that employ a registered representative who sells a
minimum dollar amount of the shares of a Fund during a specific period of time.
Dealers may not use sales of any of the Fund's shares to qualify for or
participate in such programs to the extent such may be prohibited by a dealer's
internal procedures or by the laws of any state or any self-regulatory agency,
such as the National Association of Securities Dealers, Inc. Such bonuses or
other incentives take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives and members of their families to places within or without the
United States, or other bonuses such as certificates for airline tickets, dining
establishments or the cash equivalent of such bonuses. The Underwriter, from
time to time, reallows all or a portion of the sales charge on Class A shares,
which it normally reallows to individual selling dealers. However, such
additional reallowance generally will be made only when the selling dealer
commits to substantial marketing support such as internal wholesaling through
dedicated personnel, internal communications and mass mailings.
Each Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (collectively the "Plans"). The
Plans permit each Fund to compensate the Underwriter in connection with
activities intended to promote the sale of shares of each class of shares of
each Fund.
Pursuant to the Plan for Class A shares, each Fund may compensate the
Underwriter up to 0.30% of average daily net assets of such Fund's Class A
shares. Under the Plans for Class B and Class C shares, each Fund may compensate
the Underwriter up to 1.00% of the average daily net assets attributable to the
respective class of such Fund. Pursuant to the Plan for Class T shares, each
Fund compensates the Underwriter in an amount equal to 0.95% (in the case of
Special Fund, Growth Fund, and Strategic Income Fund), 0.75% (in the case of
Balance Sheet Opportunities Fund) and 0.65% (in the case of Government
Securities Fund and High Yield Fund) of annual average daily net assets of such
Fund's Class T shares. However, each of the Class T Plans provides for
compensation of up to 1.00% of annual average daily net assets. Expenditures by
the Underwriter under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Funds (including underwriting fees and
financing expenses incurred in connection with the sale of Class B and Class C
shares); (ii) compensation, sales incentives and payments to sales, marketing
and service personnel; (iii) payments to broker-dealers and other financial
institutions that have entered into agreements with the Underwriter in the form
of a Dealer Agreement for Northstar Funds for services rendered in connection
with the sale and distribution of shares of the Funds; (iv) payment of expenses
incurred in sales and promotional activities, including advertising expenditures
related to the Funds; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Funds' Prospectus and SAI for
distribution to potential investors; and (vii) other activities that are
reasonably calculated to result in the sale of shares of the Funds. With respect
to each Class T Plan, it is anticipated that all of the payments received by the
Underwriter under the Plan will be paid to Advest as compensation for its prior
distribution related and current shareholder servicing related activities in
connection with the Class T Shares.
A portion of the fees paid to the Underwriter pursuant to the 12b-1 plans
not exceeding 0.25% annually of the average daily net assets of each Fund's
shares may be paid as compensation for providing services to each Fund's
shareholders, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee"). In order to receive Service Fees
under the Plans, participants must meet such qualifications as are
established in the sole discretion of the Underwriter, such as services to
each Fund's shareholders; or services providing each Fund with more efficient
methods of offering shares to coherent groups of clients, members or
prospects of a participant; or services permitting purchases or sales of
shares, or transmission of such purchases or sales by computerized tape or
other electronic equipment; or other processing.
The Plans are designed to be compensation plans and therefore amounts spent
by the distributor in excess of plan limits are not carried over from year to
year for reimbursement. The Plans do, however, contemplate that amounts paid to
the distributor may compensate it for past distribution efforts without regard
to any particular time period.
If the Plans are terminated in accordance with their terms, the obligations
of a Fund to compensate the Underwriter for distribution related services
pursuant to the Plans will cease; however, subject to approval by the Trustees,
including a majority of the independent Trustees, a Fund may continue to make
payments past the date on which each Plan terminates up to the annual limits set
forth in each Plan for the purpose of compensating the Underwriter for services
that were incurred during the term of the Plan.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit each Fund and its shareholders and that the Plans should
result in greater sales and/or fewer redemptions of Fund shares. On a quarterly
basis, the Trustees will review a report on expenditures under the Plans and the
purposes for which expenditures were made. The Trustees will conduct an
additional, more extensive review annually in determining whether the Plans
shall be continued. By their terms, continuation of the Plans from year to year
is contingent on annual approval by a majority of the Trustees acting separately
on behalf of each Fund
21
<PAGE>
and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plans or any related agreements (the
"Plan Trustees"). The Plans provide that they may not be amended to increase
materially the costs that a Fund may bear pursuant to the applicable Plan
without approval of the shareholders of the affected Fund and that other
material amendments to the Plans must be approved by a majority of the Plan
Trustees acting separately on behalf of each Fund, by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plans further
provide that while each plan is in effect, the selection and nomination of
Trustees who are not "interested persons" shall be committed to the discretion
of the Trustees who are not "interested persons." A Plan may be terminated at
any time by vote of a majority of the Plan Trustees or a majority of the
outstanding Class of shares of the affected Fund to which the Plan relates.
During their fiscal year-ended October 31, 1996, each class of shares of
the Funds listed below paid the following 12b-1 distribution and service fees
pursuant to the Plan of Distribution for each class:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Income and Growth Fund................................... $ 242,908 $ 671,688 $583,906
High Total Return Fund................................... $ 382,173 $2,028,953 $296,918
</TABLE>
For the year ended October 31, 1996, expenses incurred by the Distributor
for distribution related activities with respect to each class of shares of each
Fund listed below were as follows:
<TABLE>
<CAPTION>
INCOME AND GROWTH
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Salaries/Overrides..................................... $222,594 $ 29,916 $ 15,032
Commissions Paid....................................... $ 0 $ 626,730 $ 83,415
Marketing/Convention/RMM Expense....................... $210,884 $ 39,999 $ 24,168
Total.................................................. $433,478 $ 696,645 $122,615
</TABLE>
<TABLE>
<CAPTION>
HIGH TOTAL RETURN FUND
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
EXPENSE
Salaries/Overrides..................................... $580,131 $ 605,403 $110,500
Commissions Paid....................................... $ 0 $10,186,696 $447,621
Marketing/Convention/RMM Expense....................... $335,210 $ 121,049 $ 12,601
Total.................................................. $915,341 $10,913,148 $570,722
</TABLE>
For the following Funds' fiscal year ended October 31, 1996, the
Distributor received the following amounts in sales charges, after reallowance
to Dealers:
<TABLE>
<CAPTION>
UNDERWRITING FEES
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Income and Growth Fund................................... $ 25,657 $216,133 $ 4,049
High Total Return Fund................................... $553,006 $466,013 $22,368
</TABLE>
During their fiscal year ended December 31, 1996, each class of shares of
the Funds listed below, paid the following 12b-1 distribution and service fees
pursuant to the Distribution Plan for each class:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
Special Fund.................................... $108,927 $630,676 $189,225 $328,758
Growth Fund..................................... $ 4,665 $ 33,508 $ 2,365 $679,967
Balance Sheet Fund.............................. $ 3,058 $ 30,311 $ 3,219 $502,693
Government Securities........................... $ 31,014 $ 59,149 $ 8,032 $813,064
Strategic Income Fund........................... $ 68,706 $273,868 $ 32,011 $270,759
High Yield Fund................................. $ 32,630 $575,358 $ 98,509 $851,368
</TABLE>
22
<PAGE>
During the fiscal year ended December 31, 1996, expenses incurred by the
Distributor (or Advest with respect to Class T Shares prior to June 2, 1995) for
certain distribution related activities with respect to each class of shares of
the Funds listed below were as follows:
<TABLE>
<CAPTION>
SPECIAL FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $202,492 $ 321,375 $103,940 $0
Commissions Paid................................. $ 0 $5,309,686 $425,317 $0
Marketing/Convention/RMM Expense................. $110,034 $ 41,232 $ 9,294 $0
Total............................................ $312,526 $5,672,293 $538,551 $0
</TABLE>
<TABLE>
<CAPTION>
GROWTH FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $ 5,428 $ 5,267 $ 626 $0
Commissions Paid................................. $ 0 $ 94,654 $2,353 $0
Marketing/Convention/RMM Expense................. $ 5,167 $ 2,182 $ 118 $0
Total............................................ $10,595 $102,103 $3,097 $0
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET OPPORTUNITIES FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $3,605 $ 4,924 $ 334 $0
Commissions Paid................................. $ 0 $86,309 $1,246 $0
Marketing/Convention/RMM Expense................. $2,855 $ 1,954 $ 153 $0
Total............................................ $6,460 $93,187 $1,733 $0
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $31,119 $ 16,558 $ 2,853 $0
Commissions Paid................................. $ 0 $284,212 $11,411 $0
Marketing/Convention/RMM Expense................. $30,446 $ 3,859 $ 378 $0
Total............................................ $61,565 $304,629 $14,642 $0
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $ 67,162 $ 27,186 $ 6,101 $0
Commissions Paid................................. $ 0 $513,641 $27,670 $0
Marketing/Convention/RMM Expense................. $ 61,783 $ 17,684 $ 1,520 $0
Total............................................ $128,945 $ 55,854 $35,291 $0
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
HIGH YIELD FUND
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
EXPENSE
Salaries/Overrides............................... $43,187 $ 124,358 $ 27,973 $0
Commissions Paid................................. $ 0 $2,165,191 $120,421 $0
Marketing/Convention/RMM Expense................. $30,923 $ 37,394 $ 4,709 $0
Total............................................ $74,110 $2,326,943 $ 44,724 $0
</TABLE>
For the following Funds' fiscal year ended December 31, 1996, the
Distributor (or Advest) received the following amounts in sales charges, after
reallowance to Dealers:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
Special Fund.................................... $381,500 $152,531 $39,451 $228,166
Growth Fund..................................... $ 3,593 $ 7,731 $ 29 $ 95,746
Balance Sheet Fund.............................. $ 2,436 $ 6,780 $ 406 $ 65,812
Government Securities........................... $ 52,148 $ 19,375 $ 955 $234,689
Strategic Income................................ $ 13,924 $105,239 $ 2,944 $205,047
High Yield Fund................................. $ 9,722 $141,189 $ 9,752 $ 77,316
</TABLE>
TRUSTEES AND OFFICERS
The Trustees and principal Officers of each Fund and their business
affiliations for the past five years are set forth below. Unless otherwise
noted, the mailing address of the Trustees and Officers is Two Pickwick Plaza,
Greenwich, Connecticut 06830.
ROBERT B. GOODE, JR., Trustee. Age: 66. Currently retired. From 1990 to
1991, Chairman of The First Reinsurance Company of Hartford. From 1987 to
1989, President and Director of American Skandia Life Assurance Company.
Since October 1993, Trustee of the Northstar affiliated investment
companies.
PAUL S. DOHERTY, Trustee. Age: 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 Northwestern NationalLife Insurance Co.
and Chairman of other ReliaStar Affiliated Insurance Companies since 1995.
Since October 1993, Director of Northstar and affiliates. Prior to May
1993, President and CEO of ReliaStar and Northwestern National.
ALAN L. GOSULE, Trustee. Age: 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, Incorporated, F.L. Putnam Investment Management
Company, Incorporated, Interstate Power Company, Inc., Trust Realty Corp.
and Bow Ridge Mining Co.; Director of Anchor Investment Management
Corporation; President and Trustee of Anchor Capital Accumulation Trust,
Anchor International Bond Trust, Anchor Gold and Currency Trust, Anchor
Resources and Commodities Trust and Anchor Strategic Assets Trust.
*Deemed to be an "interested person" of the Trust, as defined by the 1940 Act.
24
<PAGE>
JOHN R. SMITH, Trustee. Age: 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 ofNorthstar Distributors, Inc. From 1987 to 1993, Vice President
and Treasurer of National Securities & Research Corporation.
Northstar and Northstar Administrators Corporation make their personnel
available to serve as Officers and "Interested Trustees" of the Funds. All
Officers and Interested Trustees of the Funds are compensated by Northstar or
Northstar Administrators Corporation. Trustees who are not "interested persons"
of the Adviser are paid an annual retainer fee of $6,000 for their combined
services as Trustees to the Funds and to retail funds sponsored or advised by
the Adviser, and a per meeting fee of $1,500 for attendance at each joint
meeting of the Funds and the other Northstar retail funds. The Funds also
reimburse Trustees for expenses incurred by them in connection with such
meetings.
Mone Anathan, III, Dr. Loring E. Hart, Reverend Bartley MacPhaidin and
Edward T. Sullivan, each of whom were previously Trustees of the Funds, serve on
an Advisory Board. The Advisory Board is expected to provide advice to the Board
of Trustees in order to facilitate a smooth management transition regarding the
advisory services to be provided by Northstar and to provide such other advise
as the Board of Trustees may request from time to time. The Advisory Board will
have no authority or control over the Funds. Northstar has agreed to assume all
expenses associated with the Advisory Board for three years.
As of December 31, 1996, all Trustees and executive officers of each Fund
as a group owned beneficially or of record less than 1% of the outstanding
securities of such Fund. To the knowledge of the Funds, as of December 31, 1996,
no shareholder owned beneficially (b) or of record (r) more than 5% of a Fund's
outstanding shares, except as set forth below:
(1) Income and Growth Fund
A
Norwest Bank 28% (r)
Minneapolis, Minnesota
B
Merrill Lynch Pierce Fenner & Smith 28.4% (r)
Jacksonville, Florida
(2) High Total Return Fund
A
Merrill Lynch Pierce Fenner & Smith 9.6% (r)
Jacksonville, Florida
B
Merrill Lynch Pierce Fenner & Smith 35.7% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 47% (r)
Jacksonville, Florida
(3) Growth + Value Fund
A
Merrill Lynch Pierce Fenner & Smith 33.5% (r)
Jacksonville, Florida
Norwest Bank 47.4% (r)
Minneapolis, MN
C
Merrill Lynch 11.8% (r)
Jacksonville, Florida
Bear Stearns Securities 6.5% (r)
Brooklyn, New York
Mrs. Ruth A. Samuels Trustee 5.9% (b)
Laguna Hills, California
Merrill Lynch 23.2% (r)
Jacksonville, Florida
(4) Special Fund
A
Merrill Lynch Pierce Fenner & Smith 29.5% (r)
Jacksonville, Florida
B
Merrill Lynch Pierce Fenner & Smith 38.5% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 64.9% (r)
Jacksonville, Florida
(5) Growth Fund
A
NWNL Ins Co Retirement Plan Div 26.2% (r)
Lifestyle II Separate Acct 3
Greenwich, Connecticut
NWNL Ins Co Retirement Plan Div 28.7% (r)
Lifestyle I
Greenwich, Connecticut
B
Merrill Lynch Pierce Fenner & Smith 15.8% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 15.3% (r)
Jacksonville, Florida
Gerald A. Mitchell 35.7% (b)
Ypsilanti, Michigan
Advest Inc. 6.4% (r)
Hartford, Connecticut
(6) Balance Sheet Opportunities Fund
A
Advest Inc 6.2% (r)
Hartford, Connecticut
Margaret M. Standring Trust 5.6% (b)
Weymouth, Massachusetts
Donaldson Lufkin Jenrette 6.4% (r)
Jersey City, New Jersey
Mildred J. Clark 10% (b)
Palatine, Illinois
Donaldson Lufkin Jenrette 6.5% (r)
Jersey City, New Jersey
Advest Inc 7.3% (r)
Hartford, Connecticut
B
Merrill Lynch Pierce Fenner & Smith 9.3% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 5.1% (r)
Jacksonville, Florida
Louise H. Fitzgerald 53.5% (b)
So. Attleboro, Massachusetts
(7) Government Securities Fund
A
Merrill Lynch Pierce Fenner & Smith 8% (r)
Jacksonville, Florida
Donaldson Lufkin Jenrette 16.4% (r)
Jersey City, New Jersey
Donaldson Lufkin Jenrette 17% (r)
Jersey City, New Jersey
Donaldson Lufkin Jenrette 16.9% (r)
Jersey City, New Jersey
Donaldson Lufkin Jenrette 17.6% (r)
Jersey City, New Jersey
Order of St. Benedict of New Jersey 5.2% (b)
Morristown, New Jersey
Order of St. Benedict of New Jersey 9.8% (b)
Morristown, New Jersey
B
Merrill Lynch Pierce Fenner & Smith 7.4% (r)
Jacksonville, Florida
Advest Inc. 5.1% (r)
Hartford, Connecticut
C
Merrill Lynch Pierce Fenner & Smith 96% (r)
Jacksonville, Florida
(8) Strategic Income Fund
A
Norwest Bank 29.8% (r)
Minneapolis, Minnesota
NWNL Ins Co Retirement Plan Div. 5.5% (r)
Lifestyle III Separate Acct 3
Greenwich, Connecticut
NWNL Ins Co Retirement Plan Div 6.9% (r)
Lifestyle II Separate Acct 3
Greenwich, Connecticut
B
Merrill Lynch Pierce Fenner & Smith 31.6% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 33.2% (r)
Jacksonville, Florida
(9) High Yield Fund
A
Merrill Lynch Pierce Fenner & Smith 15% (r)
Jacksonville, Florida
B
Merrill Lynch Pierce Fenner & Smith 40.3% (r)
Jacksonville, Florida
C
Merrill Lynch Pierce Fenner & Smith 58.5% (r)
Jacksonville, Florida
COMPENSATION TABLE
PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PENSION BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FROM ALL FUNDS IN
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 --
John G. Turner........................... (a) 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....................................... -- -- -- --
John G. Turner....................................... -- -- -- --
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 Northstar Trust and each of the remaining
Northstar Funds. Coopers & Lybrand L.L.P. audits the Funds' annual financial
statements and expresses an opinion thereon.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian, and fund accounting
agent for the Funds and the NorthStar Trust.
TRANSFER AGENT. Pursuant to a Transfer Agency Agreement with each Fund, First
Data (the "Transfer Agent") acts as the Transfer Agent for each Fund. Pursuant
to a Sub-Transfer Agency Agreement between Advest Transfer Services, Inc.
("ATS") and First Data, ats serves as the subtransfer agent for the Funds
offering Class T shares, and, prior to June 5, 1995, ats acted as transfer agent
to these Funds.
REPORTS TO SHAREHOLDERS. The fiscal year of the Northstar Trust ends on October
31. The fiscal year of each other Fund ends on December 31. Each Fund will send
financial statements to its shareholders at least semiannually. An annual report
containing financial statements audited by the independent accountants will be
sent to shareholders each year.
ORGANIZATIONAL AND RELATED INFORMATION. Special Fund (formerly The Advantage
Special Fund) was organized in 1986; Growth Fund (formerly The Advantage Growth
Fund) was organized in 1986; Balance Sheet Opportunities Fund (formerly The
Advantage Income Fund) was organized in 1986; Government Securities Fund
(formerly The Advantage Government Securities Fund) was organized in 1986;
Strategic Income Fund (formerly The Advantage Strategic Income Fund) was
organized in 1994; and
27
<PAGE>
High Yield Fund (formerly The Advantage High Yield Bond
Fund) was organized 1989. Northstar Trust (formerly Northstar Advantage Trust),
and two of its series Income and Growth Fund (formerly Northstar Advantage
Income and Growth Fund) and High Total Return Fund (formerly Northstar Advantage
High Total Return Fund), was organized in 1993. Northstar Growth + Value Fund
was organized in 1996.
The shares of each Fund, when issued, will be fully paid and
non-assessable, have no preference, preemptive, or similar rights, and will be
freely transferable. There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. Shareholders may, in accordance with the Declaration of Trust,
cause a meeting of shareholders to be held for the purpose of voting on the
removal of Trustees. Meetings of the shareholders will be called upon written
request of shareholders holding in the aggregate not less than 10% of the
outstanding shares of the affected Fund or class having voting rights. Except as
set forth above and subject to the 1940 Act, the Trustees will continue to hold
office and appoint successor Trustees.
Under Massachusetts law, there is a remote possibility that shareholders of
a business trust could, under certain circumstances, be held personally liable
as partners for the obligations of such trust. The Amended and Restated
Declaration of Trust for each Fund contains provisions intended to limit such
liability and to provide indemnification out of Fund property of any shareholder
charged or held personally liable for obligations or liabilities of a Fund
solely by reason of being or having been a shareholder of a Fund and not because
of such shareholder's acts or omissions or for some other reason. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which a Fund itself would be unable to meet its
obligations.
PERFORMANCE INFORMATION
Performance information for the Funds may be compared in reports and
promotional literature to (1) the S&P 500, Dow Jones Industrial Average
("DJIA"), or other unmanaged indices, so that investors may compare each Fund's
results to those of a group of unmanaged securities that are widely regarded by
investors as representative of the securities markets in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, Inc., a widely
used independent research firm that ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications or persons who rank mutual funds on overall performance or other
criteria; (iii) the Consumer Price Index (measure for inflation) to assess the
real rate of return from an investment in a Fund; and (iv) well known monitoring
sources of cd performance rates, such as Solomon Brothers, Federal Reserve
Bulletin, American Bankers and Tower Data/The Wall Street Journal. Unmanaged
indices may assume the reinvestment of dividends, but generally do not reflect
deductions for administrative and management costs and expenses. Performance
rankings are based on historical information and are not intended to indicate
future performance.
In addition, the Funds may, from time to time, include various measures of
a Fund's performance, including the current yield, the taxequivalent yield and
the average annual total return of shares of the Funds in advertisements,
promotional literature or reports to shareholders or prospective investors. Such
materials may occasionally cite statistics to reflect a Fund's volatility risk.
AVERAGE ANNUAL TOTAL RETURN. Standardized quotations of average annual
total return ("Standardized Return") for each class of shares will be expressed
in terms of the average annual compounded rate of return for a hypothetical
investment in such class of shares over periods of 1, 5 and 10 years or up to
the life of the class of shares, calculated for each class separately pursuant
to the following formula:
P(1+T) to the power of n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = the average annual total return
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the period).
All total return figures reflect the deduction of a proportional share of
each Class's expenses (on an annual basis), the deduction of the maximum initial
sales load (in the case of Class A shares) and the maximum contingent deferred
sales charge
28
<PAGE>
applicable to a complete redemption of the investment (in the case of Class
B, Class C and Class T shares), and assume that all dividends and
distributions are reinvested when paid.
YIELD. Quotations of yield for a specific class of shares of a Fund will be
based on all investment income attributable to that class earned during a
particular 30-day (or one month) period (including dividends and interest), less
expenses accrued during the period ("net investment income"), and will be
computed by dividing the net investment income per share of that class earned
during the period by the maximum offering price per share on the last day of the
month, according to the following formula:
Yield = 2[(a-b + 1) to the power of 6 -1]
cd
Where:
a = dividends and interest earned during the period attributable to a
specific class of shares
b = expenses accrued for the period attributable to that class (net of
reimbursements)
c = the average daily number of shares of that class outstanding during the
period that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period
The maximum offering price includes a maximum contingent deferred
sales load of 4%, in the case of Class T shares, 5% for Class B shares, and
1%, for Class C shares.
All accrued expenses are taken into account as follows. Accrued
expenses include all recurring expenses that are charged to all shareholder
accounts in proportion to the length of the base period, including but not
limited to expenses under the Funds' distribution plans. Except as noted,
the performance results take the contingent deferred sales load into
account.
The yield for Class A, B, C and T shares of the Special Fund, Growth
Fund, Balance Sheet Opportunities Fund, Government Securities Fund,
Strategic Income Fund, and High Yield Fund for the month ended December 31,
1996, and the yield for Class A, B and C of the Income and Growth Fund and
High Total Return Fund for the month ended October 31, 1996 was as follows:
YIELD
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C CLASS T
<S> <C> <C> <C> <C>
Special Fund............................................................... 0.04% -0.70% -0.76% -0.51%
Growth Fund................................................................ -0.14% -0.69% -0.49% -0.31%
Balance Sheet Opportunities Fund........................................... 5.61% 5.01% 5.07% 5.57%
Government Securities Fund................................................. 6.55% 6.24% 6.43% 6.80%
Strategic Income Fund...................................................... 6.28% 5.88% 5.71% 6.08%
High Yield Fund............................................................ 7.98% 7.66% 7.64% 8.20%
Income and Growth.......................................................... 2.63% 2.04% 2.10% N/A
High Total Return Fund..................................................... 9.56% 9.28% 9.32% N/A
</TABLE>
NON-STANDARDIZED RETURN. In addition to the performance information
described above, the Funds may provide total return information that is not
calculated according to the formula set forth above ("Non-Standardized
Return"). Neither initial nor contingent deferred sales charges are taken
into account in calculating Non-Standardized Return. Excluding a Fund's
sales charge from a total return calculation produces a higher total return
figure.
The following tables summarize the calculation of Standardized and
Non-Standardized Return for Class A, Class B and Class C shares of each
Fund in the Northstar Trust and for Class A, Class B, Class C and Class T
shares of the other Funds for the periods indicated.
29
<PAGE>
NORTHSTAR TRUST. The following table summarizes the calculation of
Total Return for the periods indicated through October 31, 1996, assuming
the contingent deferred sales load HAS been assessed:
<TABLE>
<CAPTION>
SINCE
ONE YEAR INCEPTION*
<S> <C> <C>
INCOME AND GROWTH FUND
Class A......................................................... 9.08% 8.04%
Class B......................................................... 8.60% 6.52%
Class C......................................................... 12.68% 8.90%
HIGH TOTAL RETURN FUND
Class A......................................................... 12.62% 7.25%
Class B......................................................... 12.32% 5.75%
Class C......................................................... 16.28% 7.82%
</TABLE>
The following table summarizes the calculation of Total Return for the
periods indicated through October 31, 1996, assuming the contingent
deferred sales load HAS NOT been assessed:
<TABLE>
<CAPTION>
SINCE
ONE YEAR INCEPTION*
<S> <C> <C>
INCOME AND GROWTH FUND
Class A......................................................... 14.48% 9.82%
Class B......................................................... 13.60% 7.49%
Class C......................................................... 13.68% 8.90%
HIGH TOTAL RETURN FUND
Class A......................................................... 18.14% 9.02%
Class B......................................................... 17.32% 6.65%
Class C......................................................... 17.28% 7.82%
</TABLE>
*The inception date for Class A, Class B and Class C shares of Income and
Growth Fund and High Total Return Fund is November 8, 1993, February 9,
1994 and March 21, 1994, respectively.
THE REMAINING FUNDS. The following table summarizes the calculation of
Total Return for Class T shares of the remaining Funds for the periods
indicated through December 31, 1996, assuming the maximum sales charge HAS
been assessed:
<TABLE>
<CAPTION>
SINCE
ONE YEAR FIVE YEARS TEN YEARS INCEPTION*
<S> <C> <C> <C> <C>
Special Fund......................................... 13.47% 11.36% 12.38% 10.13%
Growth Fund.......................................... 15.90% 10.43% 12.05% 11.86%
Balance Sheet Fund................................... 6.42% 9.98% 9.52% 9.71%
Government Securities Fund........................... -3.44% 7.66% 7.04% 7.23%
Strategic Income Fund................................ 6.39% N/A N/A 10.04%
High Yield Fund...................................... 10.49% 14.07% N/A 10.97%
</TABLE>
The following table summarizes the calculation of Total Return for
Class T shares of the remaining Funds for the periods indicated through
December 31, 1996, assuming the maximum sales charge HAS NOT been assessed:
<TABLE>
<CAPTION>
SINCE
ONE YEAR FIVE YEARS TEN YEARS INCEPTION*
<S> <C> <C> <C> <C>
Special Fund......................................... 17.47% 11.36% 12.38% 10.13%
Growth Fund.......................................... 19.90% 10.43% 12.05% 11.86%
Balance Sheet Fund................................... 10.18% 9.98% 9.52% 9.71%
Government Securities Fund........................... 0.32% 7.66% 7.04% 7.23%
Strategic Income Fund................................ 10.39% N/A N/A 10.73%
High Yield Fund...................................... 14.49% 14.07% N/A 10.97%
</TABLE>
30
<PAGE>
*The inception date for Class T shares of Special, Growth, Balance Sheet
Opportunities and Government Securities Funds was February 1, 1986. The
inception date for Class T shares of the High Yield Fund was July 5, 1989.
The inception date for Class T shares of the Strategic Income Fund was
July 1, 1994.
The following table summarizes the calculation of Total
Return for Class A, Class B and Class C shares of the remaining Funds for
the period from commencement of operations of such classes (June 5, 1995)
through December 31, 1996, assuming the maximum sales charge HAS been
assessed:
<TABLE>
<CAPTION>
Since
1 Year Inception
<S> <C> <C>
Fund
Special
Class A 12.57% 15.90%
Class B 12.37% 16.46%
Class C 16.37% 18.76%
Growth
Class A 14.85% 16.94%
Class B 14.74% 17.62%
Class C 18.74% 19.85%
Balance Sheet
Class A 5.25% 11.00%
Class B 5.07% 11.56%
Class C 8.78% 13.66%
Government
Class A -4.19% 3.55%
Class B -4.86% 3.55%
Class C -1.15% 5.98%
Strategic Income
Class A 5.60% 7.45%
Class B 5.18% 7.61%
Class C 9.11% 9.93%
High Yield
Class A 9.25% 8.55%
Class B 8.93% 8.81%
Class C 12.93% 11.21%
</TABLE>
The following table summarizes the calculation of Total Return for
Class A, Class B and Class C shares of the remaining Funds for the period
from commencement of operations of such classes (June 5, 1995) through
December 31, 1996, assuming the maximum sales charge HAS NOT been assessed:
<TABLE>
<CAPTION>
Since
1 Year Inception
<S> <C> <C>
Fund
Special
Class A 18.16% 19.54%
Class B 17.37% 18.76%
Class C 17.37% 18.76%
Growth
Class A 20.54% 20.61%
Class B 19.74% 19.91%
Class C 19.74% 19.85%
Balance Sheet
Class A 10.54% 14.50%
Class B 9.76% 13.73%
Class C 9.72% 13.66%
Government
Class A 0.57% 6.77%
Class B -0.15% 6.01%
Class C -0.21% 5.98%
Strategic Income
Class A 10.88% 10.80%
Class B 10.18% 10.02%
Class C 10.11% 9.93%
High Yield
Class A 14.74% 11.91%
Class B 13.93% 11.21%
Class C 13.93% 11.21%
</TABLE>
A Fund may quote its performance in various ways, using various types
of comparisons to market indices, other funds or investment alternatives,
or to general increases in the cost of living. All performance information
supplied by the Funds in advertising is historical and is not intended to
indicate future returns. Each Fund's share prices and total returns
fluctuate in response to market conditions and other factors, and the value
of the Fund's shares when redeemed may be more or less than their original
cost.
Evaluations of Fund performance made by independent sources may also
be used in advertisements concerning the Funds, including reprints of, or
selections from, editorials or articles about a Fund. These editorials or
articles may include quotations of performance from other sources, such as
Lipper or Morningstar. Sources for Fund performance information and
articles about the Fund may include the following: BANXQUOTE, BARRON'S,
BUSINESS WEEK, CDA INVESTMENT TECHNOLOGIES, INC., CHANGING TIMES, CONSUMER
DIGEST, FINANCIAL WORLD, FORBES, FORTUNE, IBC/DONOGHUES'S MONEY FUND
REPORT, IBBOTSON ASSOCIATES, INC., INVESTMENT COMPANY DATA, INC.,
INVESTOR'S DAILY, LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND
PERFORMANCE ANALYSIS, MONEY, MUTUAL FUND VALUES, THE NEW YORK TIMES,
PERSONAL INVESTING NEWS, PERSONAL INVESTOR, SUCCESS, USA TODAY, U.S. NEWS
AND WORLD REPORT, WALL STREET JOURNAL, WIESENBERGER INVESTMENT COMPANIES
SERVICES, AND WORKING WOMAN.
When comparing yield, total return and investment risk of shares of a
Fund with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in
shares of the Fund. For example, certificates of deposit may have fixed
rates of return and may be insured as to principal and interest by the
FDIC, while a Fund's returns will fluctuate and its share values and
returns are not guaranteed. Money market accounts offered by banks also
may be insured by the FDIC and may offer stability of principal. U.S.
Treasury securities are guaranteed as to principal and interest by the
full faith and credit of the U.S. government. Money market mutual funds
may seek to offer a fixed price per share.
The performance of a Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of
the Fund for any period in the future. The performance of a Fund is a
function of many factors including its earnings, expenses and number of
outstanding shares. Fluctuating market conditions; purchases, sales and
maturities of portfolio securities; sales and redemptions of shares of
beneficial interest, and changes in operating expenses are all examples of
items that can increase or decrease the Fund's performance.
31
<PAGE>
FINANCIAL STATEMENTS
The Northstar Trust's 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.
The audited financial statements of Special Fund, Growth Fund, Balance
Sheet Opportunities Fund, Government Securities Fund, Strategic Income Fund
and High Yield Fund as of and for the fiscal period ended December 31, 1996
and the report of the independent accountants, Coopers & Lybrand L.L.P.,
with respect to such financial statements are hereby incorporated by
reference to the Annual Report to Shareholders of The NorthStar
Funds for the fiscal year ended December 31, 1996.
32
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: Included in Part A:
NORTHSTAR TRUST - Financial Highlights for a share outstanding throughout
the period November 8, 1993 (Class A) February 9, 1994 (Class B) and March 21,
1994 (Class C) (commencement of offering of each Class) through October
31, 1996.
SPECIAL, GROWTH, BALANCE SHEET OPPORTUNITIES AND GOVERNMENT SECURITIES
FUNDS: Financial Highlights for a share outstanding throughout the period
January 1 to December 31, 1996.
HIGH YIELD FUND: Financial Highlights for a share outstanding throughout
the period June 5, 1989 (commencement of operations) through December 31, 1996.
STRATEGIC INCOME FUND: Financial Highlights for a share outstanding
throughout the period July 1, 1994 (commencement of operations) to December
31, 1996.
Included in Part B: The audited financial statements for the year ended
October 31, 1996 for the Northstar Trust and for the year ended December 31,
1996 for the Special, Growth, Balance Sheet Opportunities, Government
Securities, Strategic Income and High Yield, and the report of the independent
accountants with respect to such financial statements are incorporated in the
Statement of Additional Information for the Trust and each Fund by reference to
the Annual Report to Shareholders for the Trust and each Fund for the fiscal
years ended October 31, 1996 and December 31, 1996, respectively. The
incorporated financial information for the years ended October 31, 1996 for the
Trust and December 31, 1996 for the other Funds includes the following:
Statement of Investments, Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets, Financial Highlights, Notes to
Financial Statements, and report of independent accountants.
<PAGE>
(b) EXHIBITS - NORTHSTAR TRUST
(1) (a) Declaration of Trust (1)
(b) Amendment of Declaration of Trust (3)
(c) Amendment of Declaration of Trust (5)
(d) Amendment of Declaration of Trust (9)
(e) Amendment of Declaration of Trust
(f) Amendment of Declaration of Trust
(g) Amendment of Declaration of Trust
(h) Amendment of Declaration of Trust
(i) Amendment of Declaration of Trust
(j) Amendment of Declaration of Trust
(k) Amendment of Declaration of Trust
(2) By-Laws (1)
(a) Amendment of By-Laws
(b) Amendment of By-Laws
(3) N/A
(4) N/A
(5) (a) Investment Advisory Agreement (2)
(b) Amendment of Advisory Agreement (9)
(c) Subadvisory Agreement for Northstar Income and Growth
Fund (10)
(d) Subadvisory Agreement for Northstar Growth + Value
Fund (9)
(6) (a) Underwriting Agreements (4)
(b) Amendment of Underwriting Agreements (9)
(7) N/A
(8) Custody Agreement (8)
(9) (a) Transfer Agency Agreement
(b) Administrative Services Agreement (3)
(c) Accounting Services Agreement
(10) Opinion of Counsel
(11) Consent of Independent Public Accountants
(12) Annual Report of Shareholders
(13) Subscription Agreement (3)
(14) N/A
(15) Plans of Distribution pursuant to Rule 12b-1 (8)
(a) Amendment of Distribution and Service Plan (9)
(16) Performance Information
(17) Power of Attorney (7)
(18) Multiple Class Plan Pursuant to Rule 18f-3
(27) Financial Data Schedule (EX-27)
- ---------------------
NOTES TO EXHIBIT LISTING
(1). Included in Registrant's Registration Statement filed August 24, 1993
and incorporated herein by reference.
(2). Included in Registrant's Pre-Effective Amendment No. 1 filed October 7,
1993 and incorporated herein by reference.
(3). Included in Pre-Effective Amendment No. 2 filed November 3, 1993 and
incorporated herein by reference.
(4). Included in Post-Effective Amendment No. 1 filed January 19, 1994 and
incorporated herein by reference.
(5). Included in Post-Effective Amendment No. 2 filed March 19, 1994 and
incorporated herein by reference.
(6). Included in Post-Effective Amendment No. 3 filed August 1, 1994 and
incorporated herein by reference.
<PAGE>
(7). Included in Post-Effective Amendment No. 6 filed November 1, 1995 and
Post-Effective Admendment No. 8 filed February 28, 1996, and
incorporated herein by reference.
(8). Included in Post-Effective Amendment No. 7 filed December 29, 1995 and
incorporated herein by reference.
(9). Included in Post-Effective Amenment No. 9 filed August 5, 1996 and
incorporated herein by reference.
(10). Included in Post-Effective Amendment No. 13 filed December 13, 1996
and incorporated herein by reference.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
There are no persons controlled by or under common control with Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of December 31, 1996, the Registrant had the following number of record
security holders:
<TABLE>
<CAPTION>
Title of Class Fund Number of Shareholders
<S> <C> <C> <C> <C> <C>
Shares of Beneficial Income and Growth Fund (A) 1,448 (B) 2,477 (C) 1,569 (T) N/A
Interest High Total Return Fund (A) 5,685 (B) 10,789 (C) 1,324 (T) N/A
Growth + Value Fund (A) 57 (B) 151 (C) 36 (T) N/A
Special Fund (A) 4,043 (B) 6,932 (C) 1,118 (T) 3,956
Growth Fund (A) 216 (B) 656 (C) 43 (T) 6,218
Balance Sheet Opportunities Fund (A) 97 (B) 421 (C) 35 (T) 4,674
Government Securities Fund (A) 110 (B) 543 (C) 30 (T) 6,185
Strategic Income Fund (A) 351 (B) 1,184 (C) 104 (T) 1,870
High Yield Fund (A) 598 (B) 2,813 (C) 246 (T) 7,821
</TABLE>
<PAGE>
ITEM 27. INDEMNIFICATION - NORTHSTAR TRUST
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
(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-
<PAGE>
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:
(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.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Funds" in the Prospectus and Services of the Adviser and
Administrator" and "Trustees and Officers" in the Statement of Additional
Information, each of which is included in the Registration Statement. Set forth
is a list of each officer and director of the Adviser indicating each business,
profession, vocation or employment of a substantial nature in which each such
person has been engaged since January 31, 1994.
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL
INVESTMENT BUSINESS, PROFESSION
NAME ADVISER VOCATION OR EMPLOYMENT
- --------- --------------------------- --------------------------------------------
<S> <C> <C>
John Turner Director Chairman and CEO, ReliaStar
Financial Corp. and affiliates;
Director of Northstar Affiliates;
Trustee and Chairman, Northstar
Affiliated Investment Companies.
John Flittie Director President, ReliaStar Financial Corp.
and affiliates; Director, Northstar
Affilates.
Mark L. Lipson Chairman/CEO Director and Officer of Northstar
Director Distributors, Inc., Northstar
Administrators Corp. and Northstar,
Inc. Trustee and President, Northstar
Affiliated Investment Companies.
Robert J. Adler Executive President Northstar Distributors, Inc.
Vice
President,
Sales &
Marketing
Thomas Ole Dial Executive Vice President, Northstar Affiliated
Vice Investment Companies, and
President - Principal, TD Associates Inc.
Chief Investment Officer
Fixed Income
<PAGE>
Geoffrey Wadsworth Vice President- Vice President - Northstar Affiliated
Investments Investment Companies
and Portfolio
Manager
Peter Bakst Vice President - Vice President -
Investments Northstar Affiliated
Investment Companies
and Portfolio Manager,
Director - High Yield
Debt group for CS First
Boston Corp., President
of Presidio Capital Management,
and Managing Director at Bankers
Trust Securities Corp.
Ryan Johanson Vice President - Vice President, Northstar
Investments Affiliated Investment Companies
and Portfolio Manager, Director
of Global Market Risk Management,
and Senior Manager of Banque
Indosuez
Jeffrey Aurigemma Vice Vice President - Northstar Affiliated
President - Investment Companies
Investments and Portfolio Manager
Michael Graves Vice Vice President - Northstar Affiliated
President Investment Companies
Investments and Portfolio Manager
Agnes Mullady Sr. Vice Vice President & Treasurer of
President Northstar Affiliates and the Northstar
and CFO Affiliated Investment Companies
Gertrude Purus Vice Vice President Northstar Distributors
President - and Northstar Administrators Corp.
Operations
Stephen Vondrak Vice Vice President - Northstar
President - Distributors, Inc., Former Regional
Sales & Marketing Marketing Manager with Roger
Engemann and Associates from
` 1991-1994.
Mark Sfarra Vice Vice President - Northstar
President - Distributors, Inc.
Marketing
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITER
(a) See "How the Funds are Organized and Managed", "Meet the Portfolio
Managers" and "Your Guide to Buying, Selling and Exchanging Shares of Northstar
Funds" in the Prospectus and "Underwriter and Distribution Services" in the
Statement of Additional Information, both of which are included in this
Post-Effective Amendment to the Registration Statement. Unless
<PAGE>
otherwise indicated, the principal business address for each person is c/o
Northstar, Two Pickwick Plaza, Greenwich, CT 06830.
<TABLE>
<CAPTION>
(b) (1) (2) (3)
Name and Principal Position and Offices Position and Offices
Address with Underwriter with Registrant
- ------------------ -------------------- --------------------
<S> <C> <C>
John Turner Director Trustee, Chairman
20 Washington Ave. South
Minneapolis, MN
John Flittie Director None
20 Washington Ave. South
Minneapolis, MN
Mark L. Lipson Chairman & Director Trustee and President
Robert J. Adler President None
Mark Blinder Reg. Vice President None
Scott Casselberry Reg. Vice President None
Richard Frances Reg. Vice President None
Rick Galloway Reg. Vice President None
Daniel Leonard Reg. Vice President None
Stephen O'Brien Reg. Vice President None
David Linton Reg. Vice President None
Charles Dolce Reg. Vice President None
Hyman Glasman Reg. Vice President None
Stephen Vondrak Vice President None
Mark Sfarra Vice President None
Gertrude Purus Vice President None
Agnes Mullady Vice President Vice President
& Treasurer & Treasurer
</TABLE>
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
State Street Bank and Trust Co. maintains such records as Custodian and Fund
Accounting Agent for the Special, Growth, Balance Sheet Opportunities,
Government Securities, Strategic Income and High Yield Funds and the Northstar
Trust:
(1) Receipts and delivery of securities including certificate numbers;
(2) Receipts and disbursement of cash;
(3) Records of securities in transfer, securities in physical possession,
securities owned and securities loaned.
(4) Fund Accounting Records.
First Data Investor Services Group, ("First Data") maintains the following
records at One Exchange Place, 11th Floor, Boston, Massachusetts, 02109, as
Transfer Agent and Blue Sky Administrator for the Funds and the Northstar
Trust.
(1) Shareholder Records;
(2) Share accumulation accounts: Details as to dates and number of shares
of each accumulation, price of each accumulation.
(3) Fund Accounting Records
(4) State Securities Regisitration Records
All other records required by item 30(a) are maintained at the office of the
Administrator, Two Pickwick Plaza, Greenwich, CT 06830.
ITEM 31. Management Services
Not Applicable.
ITEM 32. Undertakings
(a) Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee or Trustees when
requested in writing to do so by the holders of at least 10% of the Trusts'
outstanding shares of beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
(b) Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders, upon
request and without charge.
(c) As to the Northstar Growth + Value Fund (the "Fund"), Registrant hereby
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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certified that it meets all
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933, and the Registrant has duly
caused this Post-Effective Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
Town of Greenwich and the State of Connecticut on the 5th day of March, 1997.
REGISTRANT
By: MARK L. LIPSON
------------------------------
Mark L. Lipson, President
SIGNATURES TITLE DATE
JOHN G. TURNER Chairman and March 5, 1997
John G. Turner* Trustee
MARK L. LIPSON Trustee March 5, 1997
Mark L. Lipson*
JOHN R. SMITH Trustee March 5, 1997
John R. Smith*
PAUL S. DOHERTY Trustee March 5, 1997
Paul S. Doherty*
DAVID W. WALLACE Trustee March 5, 1997
David W. Wallace*
ROBERT B. GOODE, JR. Trustee March 5, 1997
Robert B. Goode, Jr.*
ALAN L. GOSULE Trustee March 5, 1997
Alan L. Gosule*
DAVID W.C. PUTNAM Trustee March 5, 1997
David W.C. Putnam*
WALTER H. MAY, JR. Trustee March 5, 1997
Walter H. May, Jr.**
AGNES MULLADY Principal Financial March 5, 1997
Agnes Mullady and Accounting Officer
<PAGE>
By: AGNES MULLADY*
Agnes Mullady
Attorney-in-fact
* Executed pursuant to powers of attorney filed with Northstar Trust and
Strategic Income Fund - PEA No. 6; Northstar Government Securities Fund - PEA
No. 15; Northstar Balance Sheet Opportunities Fund - PEA No. 14; Northstar
Growth Fund - PEA No. 14; Northstar Special Fund - PEA No. 14; and Northstar
High Yield Fund - PEA No.10.
** Executed pursuant to power of attorney filed with Northstar Trust and
Strategic Income Fund - PEA No. 8; Northstar Government Securities Fund - PEA
No. 17; Northstar Balance Sheet Opportunities Fund - PEA No. 16; Northstar
Growth Fund - PEA No. 16; Northstar Special Fund - PEA No. 16; and Northstar
High Yield Fund - PEA No. 12 .
<PAGE>
INDEX TO EXHIBITS
----------------------
NORTHSTAR TRUST
<TABLE>
<CAPTION>
Exhibit No. Under
Part C of Form N1-A Name of Exhibit Page Number Herein
- ----------------- ------------- -----------------
<S> <C> <C>
Exhibit 1 (e) Amendment of Declaration of Trust
(f) Amendment of Declaration of Trust
(g) Amendment of Declaration of Trust
(h) Amendment of Declaration of Trust
(i) Amendment of Declaration of Trust
(j) Amendment of Declaration of Trust
(k) Amendment of Declaration of Trust
Exhibit 2 (a) Amendment of By-Laws
(b) Amendment of By-Laws
Exhibit 9 (a) Transfer Agency Agreement
Exhibit 10 Opinion of Counsel
Exhibit 11 Consent of Independent
Accountants
Exhibit 12 Annual Report of Shareholders
Exhibit 16 Performance Information
Exhibit 18 Multiple Class Plan Pursuant to Rule 18f-3
Exhibit 27 Financial Data Schedule (EX-27)
</TABLE>
Exhibit 1(e)
NWNL NORTHSTAR SERIES TRUST
CERTIFICATE OF AMENDMENT OF DECLARATION OF TRUST
AND REDESIGNATION OF SERIES
The undersigned, being all of the trustees of NWNL Northstar Series Trust, a
Massachusetts business trust (the "Trust"), acting pursuant to Section 8.3 and
Section 5.11 of the Trust's Declaration of Trust dated August 18, 1993, as
amended (the "Declaration of Trust"), hereby amend the Declaration of Trust to
change the name of the Trust set forth in Section 1.1 thereof and to redesignate
each existing series of the Trust, as follows:
1. Section 1.1 of the Declaration of Trust, executed on August
18, 1993, as amended, is hereby amended to read in its
entirety as follows:
"Section 1.1 Name. The name of the Trust created hereby is "NORTHSTAR
ADVANTAGE TRUST."
2. The three (3) existing Series of the Trust are redesignated as follows:
(a) The "NWNL Northstar High Yield Bond Fund" is redesignated the
"NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND".
(b) The "NWNL Northstar Multi-Sector Bond Fund" is redesignated
the "NORTHSTAR ADVANTAGE MULTI-SECTOR BOND FUND".
(c) The "NWNL Northstar Income and Growth Fund" is redesignated
the "NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND".
IN WITNESS WHEREOF, the undersigned have this day signed this Certificate of
Amendment of Declaration of Trust.
Dated: May ____, 1995
------------------------------ ------------------------------
Robert B. Goode, Jr. Mark L. Lipson
------------------------------ ------------------------------
Paul S. Doherty Marjory Williams
------------------------------ ------------------------------
David W. Wallace John H. Flittie
------------------------------
John G. Turner
<PAGE>
Exhibit 1(f)
NORTHSTAR/NWNL TRUST
WRITTEN INSTRUMENT FIXING NUMBER
OF TRUSTEES AND APPOINTMENT TRUSTEES
The undersigned, being the trustees of the Northstar/NWNL Trust, a Massachusetts
business trust (the "Trust"), acting pursuant to Article II of the Fund's
Declaration of Trust executed on December 17, 1993, as amended, (the
"Declaration of Trust") hereby fix the number of Trustees and appoint Trustees
to fill vacancies as follows:
1. Pursuant to the provisions of Section 2.11 of the Declaration
of Trust, the number of Trustees of the Trust is hereby fixed
at nine (9).
2. Pursuant to the provisions of Section 2.14 of the Declaration
of Trust, Alan L. Gosule, David W.C. Putnam, and John R.
Smith, are hereby appointed Trustees of the Trust to fill the
vacancies existing by reason of the increase in the number of
Trustees and the resignation of John Flittie.
Dated: June 30, 1995
------------------------- --------------------------
Robert B. Goode, Jr. Mark L. Lipson
------------------------- --------------------------
Paul S. Doherty Marjory Williams
------------------------- --------------------------
David W. Wallace John Turner
<PAGE>
Exhibit 1(g)
WRITTEN INSTRUMENT ABOLISHING
NORTHSTAR ADVANTAGE MULTI-SECTOR BOND FUND AS
A SEPARATE SERIES OF
NORTHSTAR ADVANTAGE TRUST
The Board of Trustees of the Northstar Advantage Trust, a Massachusetts
business trust (the "Trust"), acting pursuant to Article V, Section 5.11(f) of
the Declaration of Trust of the Trust, and pursuant to Article IV, Section 1 of
the Trust's By-laws, hereby adopts the following resolution by written consent,
which resolution shall have the same force and effect as if adopted at a meeting
of the Board of Trustees:
RESOLVED, that as a result of the acquisition of all of the assets
and liabilities of Northstar Advantage Multi-Sector Bond Fund by
and in exchange for shares of Northstar advantage Strategic Income
Fund, and there being no further shares of Northstar Advantage
Multi-Sector Bond Fund outstanding, the establishment and
designation of Northstar Advantage Multi-Sector Bond Fund be, and
it hereby is, rescinded, and Northstar Advantage Multi-Sector Bond
Fund be, and it hereby is, abolished as a separate series of the
Trust.
This instrument may be executed in several parts, each of which shall
be deemed an original, and all of which shall together constitute one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed as of the _______ day of October, 1995.
------------------------------
Mark L. Lipson, as Trustee
------------------------------
David W. C. Putnam, as Trustee
------------------------------
John Turner, as Trustee
------------------------------
Paul S. Doherty, as Trustee
------------------------------
Robert B. Goode, Jr., as Trustee
------------------------------
David W. Wallace, as Trustee
------------------------------
Alan L. Gosule, as Trustee
------------------------------
John R. Smith, as Trustee
------------------------------
Marjory Williams, as Trustee
2
<PAGE>
Exhibit 1(h)
NORTHSTAR ADVANTAGE TRUST
ESTABLISHMENT AND DESIGNATION
OF SERIES AND CLASSES OF SHARES OF BENEFICIAL
INTEREST, PAR VALUE $0.01 PER SHARE
The undersigned, being a majority of the Trustees of the Northstar Trust, a
Massachusetts business trust (the "Trust"), acting pursuant to Section 5.11 and
5.13 of the Declaration of Trust dated August 18, 1993, as amended (the
"Declaration of Trust"), hereby establish an additional series of the Trust (the
"Fund"), and divide the shares of beneficial interest of the Fund into three
separate classes (the "Classes"), the Fund and the Classes hereby created having
the following special and relative rights:
1. The Fund shall be designated Northstar Growth + Value Fund.
The Classes thereof shall be designated as follows: Northstar
Growth + Value Fund Class A, Northstar Growth + Value Fund
Class B, and Northstar Growth + Value Fund Class C.
2. The Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described
in the then current prospectus and registration statement for
the Fund under the Securities Act of 1933. Each share of each
class of the beneficial interests of the Fund ("Share") shall
be redeemable, shall represent a pro rata beneficial interest
in the assets allocated to such class of shares of the Fund,
and shall be entitled to receive its pro rata share of net
assets allocable to such class of shares of that Fund upon
liquidation of the Fund, all as provided in the Declaration of
Trust. The proceeds of sales of Shares of the Fund, together
with any income and gain thereon, less any dimunition or
expenses thereof, shall irrevocably belong to the Fund, unless
otherwise required by law.
3. Each share of beneficial interest of the Fund shall be
entitled to one vote (or fraction thereof in respect of a
fractional share) on matter which such Shares (or class of
Shares) shall be entitled to vote. Shareholders of the Fund
shall vote together as a class on any matter, except to the
extent otherwise required by the Investment Company Act of
1940, or when the Trustees have determined that the matter
affects only the interest of Shareholders of certain series
within the Trust, in which case only the Shareholders of such
series shall be entitled to vote thereon.
4. The assets and liabilities of the Trust shall be allocated
among the Fund and each other series within the Trust, as set
forth in Section 5.11 of the Declaration of Trust, except as
described below:
<PAGE>
(a) Costs incurred by the Trust on behalf of the Fund in
connection with the organization and initial registration
and public offering of Shares of the Fund shall be
amortized for the Fund over the lesser of the life of the
Fund or the five year period beginning with the month that
the Fund commences operations.
(b) Liabilities, expenses, costs, charges or reserves relating
to the distribution of, and other identified expenses that
should be properly allocated to the Shares of a particular
Class of theFund may be chareged to and borne solely by
such Class and the bearing of expenses solely by a Class
of Shares may be appropriately reflected and cause
differences in net asset value attributable to, and the
dividend, redemption and liquidation rights of, the Shares
of different Classes.
(c) The Trustees may from time to time in particular cases
make specific allocation of assets or liabilities among
the series within the Trust and each allocation of
liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the
Shareholders of all series for all purposes.
5. Shares of each Class of the Fund may vary as to rights of
redemption and conversion rights, as set forth in the then
current prospectus for the Fund.
6. The Tustees (including any successor Trustee) shall have the
right at any time and from time to time to reallocate assets
and expenses or to change the designation of the Fund or any
Class thereof now or hereafter created, or to otherwise change
the special and relative rights of the Shareholders of the
Fund or Class.
Dated: July 31, 1996
- ------------------------- -------------------------
John G. Turner Mark L. Lipson
- ------------------------- -------------------------
Paul S. Doherty Robert B. Goode, Jr.
- ------------------------- -------------------------
David W. Wallace Walter May
- ------------------------- -------------------------
David W.C. Putnam Alan L. Gosule, Esq.
- -------------------------
John R. Smith
<PAGE>
Exhibit 1(i)
NORTHSTAR ADVANTAGE TRUST
CERTIFICATE OF AMENDMENT OF DECLARATION OF TRUST
AND REDESIGNATION OF SERIES
The undersigned being all of the trustees of the Northstar Advantage Trust, a
Massachusetts business trust (the "Trust"), acting pursuant to Section 8.3 and
Section 5.11 of the Trust's Declaration of Trust dated August 18, 1993, as
amended (the "Declaration of Trust"), hereby amend the Declaration of Trust to
change the name of the Trust set forth in Section 1.1 thereof and to redesignate
each existing series of the Trust, as follows:
1. Section 1.1 of the Declaration of Trust, executed on August 18,
1993, as amended, is hereby amended to read in its entirety as follows:
"Section 1.1 Name. The name of the Trust created hereby is "Northstar Trust".
2. The two(2) existing Series of the Trust are redesignated as follows:
(a) The "Northstar Advantage High Total Return Fund" is
redesignated the "NORTHSTAR HIGH TOTAL RETURN FUND".
(b) The "Northstar Advantage Income and Growth Fund" is
redesignated the "NORTHSTAR INCOME AND GROWTH FUND"."
IN WITNESS WHEREOF, the undersigned have this day signed this Certificate of
Amendment of Declaration of Trust.
Dated: August 1, 1996
- ------------------------- -------------------------
John G. Turner Mark L. Lipson
- ------------------------- -------------------------
Paul S. Doherty Robert B. Goode, Jr.
- ------------------------- -------------------------
David W. Wallace Walter May
- ------------------------- -------------------------
David W.C. Putnam Alan L. Gosule, Esq.
- -------------------------
John R. Smith
<PAGE>
Exhibit 1(j)
NORTHSTAR TRUST
ESTABLISHMENT AND DESIGNATION
OF SERIES AND CLASSES OF SHARES OF BENEFICIAL
INTEREST, PAR VALUE $0.01 PER SHARE
The undersigned, being a majority of the Trustees of the Northstar Trust, a
Massachusetts business trust (the "Trust"), acting pursuant to Section 5.11 and
5.13 of the Declaration of Trust dated August 18, 1993, as amended (the
"Declaration of Trust"), hereby establish an additional series of the Trust (the
"Fund"), and divide the shares of beneficial interest of the Fund into three
separate classes (the "Classes"), the Fund and the Classes hereby created having
the following special and relative rights:
1. The Fund shall be designated Northstar High Total Return Fund II.
The Classes thereof shall be designated as follows: Northstar High
Total Return Fund II Class A, Northstar High Total Return Fund II
Class B, and Northstar High Total Return Fund II Class C.
2. The Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in
the then current prospectus and registration statement for the Fund
under the Securities Act of 1933. Each share of each class of the
beneficial interests of the Fund ("Share") shall be redeemable,
shall represent a pro rata beneficial interest in the assets
allocated to such class of shares of the Fund, and shall be
entitled to receive its pro rata share of net assets allocable to
such class of shares of that Fund upon liquidation of the Fund, all
as provided in the Declaration of Trust. The proceeds of sales of
Shares of the Fund, together with any income and gain thereon, less
any dimunition or expenses thereof, shall irrevocably belong to the
Fund, unless otherwise required by law.
3. Each share of beneficial interest of the Fund shall be entitled to
one vote (or fraction thereof in respect of a fractional share) on
matter which such Shares (or class of Shares) shall be entitled to
vote. Shareholders of the Fund shall vote together as a class on
any matter, except to the extent otherwise required by the
Investment Company Act of 1940, or when the Trustees have
determined that the matter affects only the interest of
Shareholders of certain series within the Trust, in which case only
the Shareholders of such series shall be entitled to vote thereon.
4. The assets and liabilities of the Trust shall be allocated among
the Fund and each other series within the Trust, as set forth in
Section 5.11 of the Declaration of Trust, except as described
below:
<PAGE>
(a) Costs incurred by the Trust on behalf of the Fund in
connection with the organization and initial registration
and public offering of Shares of the Fund shall be
amortized for the Fund over the lesser of the life of the
Fund or the five year period beginning with the month that
the Fund commences operations.
(b) Liabilities, expenses, costs, charges or reserves relating
to the distribution of, and other identified expenses that
should be properly allocated to the Shares of a particular
Class of theFund may be chareged to and borne solely by
such Class and the bearing of expenses solely by a Class
of Shares may be appropriately reflected and cause
differences in net asset value attributable to, and the
dividend, redemption and liquidation rights of, the Shares
of different Classes.
(c) The Trustees may from time to time in particular cases
make specific allocation of assets or liabilities among
the series within the Trust and each allocation of
liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the
Shareholders of all series for all purposes.
5. Shares of each Class of the Fund may vary as to rights of
redemption and conversion rights, as set forth in the then current
prospectus for the Fund.
6. The Tustees (including any successor Trustee) shall have the right
at any time and from time to time to reallocate assets and expenses
or to change the designation of the Fund or any Class thereof now
or hereafter created, or to otherwise change the special and
relative rights of the Shareholders of the Fund or Class.
Dated: October 29, 1996
- ------------------------- -------------------------
John G. Turner Mark L. Lipson
- ------------------------- -------------------------
Paul S. Doherty Robert B. Goode, Jr.
- ------------------------- -------------------------
David W. Wallace Walter May
- ------------------------- -------------------------
David W.C. Putnam Alan L. Gosule, Esq.
- -------------------------
John R. Smith
<PAGE>
Exhibit 1(k)
NORTHSTAR TRUST
ESTABLISHMENT AND DESIGNATION
OF SERIES AND CLASSES OF SHARES OF BENEFICIAL
INTEREST, PAR VALUE $0.01 PER SHARE
The undersigned, being a majority of the Trustees of the Northstar Trust, a
Massachusetts business trust (the "Trust"), acting pursuant to Section 5.11 and
5.13 of the Declaration of Trust dated August 18, 1993, as amended (the
"Declaration of Trust"), hereby establish an additional series of the Trust (the
"Fund"), and divide the shares of beneficial interest of the Fund into three
separate classes (the "Classes"), the Fund and the Classes hereby created having
the following special and relative rights:
1. The Fund shall be designated Northstar International Value
Fund. The Classes thereof shall be designated as follows:
Northstar International Value Fund Class A, Northstar
International Value Fund Class B, and Northstar International
Value Fund Class C.
2. The Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described
in the then current prospectus and registration statement for
the Fund under the Securities Act of 1933. Each share of each
class of the beneficial interests of the Fund ("Share") shall
be redeemable, shall represent a pro rata beneficial interest
in the assets allocated to such class of shares of the Fund,
and shall be entitled to receive its pro rata share of net
assets allocable to such class of shares of that Fund upon
liquidation of the Fund, all as provided in the Declaration of
Trust. The proceeds of sales of Shares of the Fund, together
with any income and gain thereon, less any dimunition or
expenses thereof, shall irrevocably belong to the Fund, unless
otherwise required by law.
3. Each share of beneficial interest of the Fund shall be
entitled to one vote (or fraction thereof in respect of a
fractional share) on matter which such Shares (or class of
Shares) shall be entitled to vote. Shareholders of the Fund
shall vote together as a class on any matter, except to the
extent otherwise required by the Investment Company Act of
1940, or when the Trustees have determined that the matter
affects only the interest of Shareholders of certain series
within the Trust, in which case only the Shareholders of such
series shall be entitled to vote thereon.
4. The assets and liabilities of the Trust shall be allocated
among the Fund and each other series within the Trust, as set
forth in Section 5.11 of the Declaration of Trust, except as
described below:
<PAGE>
(a) Costs incurred by the Trust on behalf of the Fund in
connection with the organization and initial registration
and public offering of Shares of the Fund shall be
amortized for the Fund over the lesser of the life of the
Fund or the five year period beginning with the month that
the Fund commences operations.
(b) Liabilities, expenses, costs, charges or reserves relating
to the distribution of, and other identified expenses that
should be properly allocated to the Shares of a particular
Class of theFund may be chareged to and borne solely by
such Class and the bearing of expenses solely by a Class
of Shares may be appropriately reflected and cause
differences in net asset value attributable to, and the
dividend, redemption and liquidation rights of, the Shares
of different Classes.
(c) The Trustees may from time to time in particular cases
make specific allocation of assets or liabilities among
the series within the Trust and each allocation of
liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the
Shareholders of all series for all purposes.
5. Shares of each Class of the Fund may vary as to rights of
redemption and conversion rights, as set forth in the then
current prospectus for the Fund.
6. The Tustees (including any successor Trustee) shall have the
right at any time and from time to time to reallocate assets
and expenses or to change the designation of the Fund or any
Class thereof now or hereafter created, or to otherwise change
the special and relative rights of the Shareholders of the
Fund or Class.
Dated: January 23, 1997
- ------------------------- -------------------------
John G. Turner Mark L. Lipson
- ------------------------- -------------------------
Paul S. Doherty Robert B. Goode, Jr.
- ------------------------- -------------------------
David W. Wallace Walter May
- ------------------------- -------------------------
David W.C. Putnam Alan L. Gosule, Esq.
- -------------------------
John R. Smith
<PAGE>
Exhibit 2(a)
BY-LAWS
OF
NORTHSTAR ADVANTAGE TRUST
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - OFFICES
Section 1. Resident Agent 1
Section 2. Offices 1
ARTICLE III - SHAREHOLDERS 1
Section 1. Meetings 1
Section 2. Notice of Meetings 2
Section 3. Record Date for Meetings and Other
Purposes 2
Section 4. Proxies 2
Section 5. Inspection of Records 3
Section 6. Action without Meeting 3
ARTICLE IV - TRUSTEES 3
Section 1. Meetings of the Trustees 3
Section 2. Quorum and Manner of Acting 4
ARTICLE V - COMMITTEES 4
Section 1. Executive and Other Committees 4
Section 2. Meetings, Quorum and Manner of Acting 4
Section 3. Chairman 5
ARTICLE VI - OFFICERS 5
Section 1. General Provisions 5
Section 2. Term of Office and Qualifications 5
Section 3. Removal 5
Section 4. Powers and Duties of the President 6
Section 5. Powers and Duties of Vice Presidents 6
Section 6. Powers and Duties of the Treasurer 6
Section 7. Powers and Duties of the Secretary 6
Section 8. Powers and Duties of Assistant Treasurers 7
Section 9. Powers and Duties of Assistant Secretaries 7
Section 10. Compensation of Officers and Trustees 7
ARTICLE VII - FISCAL YEAR 7
ARTICLE VIII - SEAL 7
<PAGE>
ARTICLE IX - WAIVERS OF NOTICE 8
ARTICLE X - CUSTODY OF SECURITIES
Section 1. Employment of a Custodian 8
Section 2. Action Upon Termination of
Custodian Agreement 8
Section 3. Central Certificate System 8
Section 4. Acceptance of Receipts in Lieu
of Certificate 9
ARTICLE XI - AMENDMENTS 9
ARTICLE XII - MISCELLANEOUS 9
<PAGE>
BY-LAWS OF NORTHSTAR ADVANTAGE TRUST
ARTICLE I
DEFINITIONS
The terms "Administrator", "Class", "Commission", "Custodian", "Declaration",
"Distributor", "His", "Interested Person", "Investment Adviser", "Municipal
Bonds", "1940 Act", "Person", "Series", "Shareholder", "Shareholder Servicing
Agent", "Shares", "Transfer Agent", "Trust", "Trust Property", "Trustees", and
"vote of a majority of the shares outstanding and entitled to vote", have the
respective meanings given them in the Declaration of Trust - Northstar Series
Trust dated August 18, 1993, as amended from time to time.
ARTICLE II
RESIDENT AGENT/OFFICES
Section 1. Resident Agent. The Trust shall maintain a resident agent in
the Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may designate
a successor resident agent, provided, however, that such appointment shall not
become effective until written notice thereof is delivered to the office of the
Secretary of the Commonwealth.
Section 2. Offices. The Trust may have its principal office and other
offices in such places without as well as within the Commonwealth of
Massachusetts as the Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. A meeting of Shareholders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request, which shall specify the purpose or purposes for which such
meeting is to be called, of Shareholders holding in the aggregate not less than
10% of the outstanding shares entitled to vote on the matters specified in such
written request. Any such meeting shall be held as provided in the Declaration
at such place within or without the Commonwealth of Massachusetts as the
Trustees shall designate. The holders of a majority of outstanding shares
present in person or by proxy shall constitute a quorum at any meeting of the
Shareholders. In the absence of a quorum, a majority of outstanding shares
entitled to vote present in person or by proxy may adjourn the meeting from time
to time until a quorum shall be present.
Section 2. Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail to each Shareholder at his address as recorded on
the register of the Trust mailed at least (10) days and
1
<PAGE>
not more than sixty (60) days before the meting. Only the business stated in the
notice of the meeting shall be considered at such meeting. Any adjourned meeting
may be held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose
of determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than
sixty (60) days prior to the date of any meeting of Shareholders or distribution
or other action as a record date for the determinations of the persons to be
treated as Shareholders of record for such purposes, except for dividend
payments which shall be governed by the Declaration.
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent for the Trust as the Secretary
may direct, for verification prior to the time at which such vote shall be
taken. Proxies may be solicited in the name of one or more Trustees or one or
more of the officers of the Trust. Only Shareholders of record shall be entitled
to vote. Each whole share shall be entitled to one vote as to any matter on
which it is entitled by the Declaration to vote, and each fractional share shall
be entitled to a proportionate fractional vote. When any Share is held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Share, but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such share is a minor or a person of unsound mind, and subject to
guardianship or the legal control of any other person as regards the charge or
management of such shares, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy.
Section 5. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting of a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consents shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
2
<PAGE>
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular of stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the President,
or by any one of the Trustees, at the time being in office. Notice of meetings
shall be given by the Secretary or an Assistant Secretary or by the officer or
Trustees that called the meeting and shall be mailed to each Trustee at least
two days before the meeting, or shall be telegraphed, cabled, or wirelessed to
each Trustee at his business address, or personally delivered to him at least
one day before the meeting. Such notice may, however, be waived by any Trustee.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him before or after the meeting, is filed with the records
of the protesting prior thereto or at its commencement the lack of notice to
him. A notice or waiver of notice need not specify the purpose of any meeting.
The Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting shall be deemed to have been held at a place designated by the Trustees
at the meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
by the Trustees without a meeting if all the Trustees consent to the action in
writing and the written consents are filed with the records of the Trustees
meetings. Such consents shall be treated as a vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees
shall be present in person at any regular or special meeting of the Trustees in
order to constitute a quorum for the transaction of business at such meeting and
(except as otherwise required by law, the Declaration of these By-Laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust, and such other powers of the
Trustees as the Trustees may, from time to time, delegate to them except those
powers which by law, the Declaration or these By-Laws they are prohibited from
delegating. The Trustees may also elect from their own number other Committees
from time to time, the number composing such Committees, the powers conferred
upon the same (subject to the same limitations as with respect to the Executive
3
<PAGE>
Committee) and the term of membership on such Committees to be determined by the
Trustees. The Trustees may designate a chairman of any such Committee. In the
absence of such designation the Committee may elect its own Chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.
The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the office of the Trust.
Section 3. Chairman. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successors shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as from time to time may be assigned to him by the Trustees.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Secretaries, and one or more Assistant Treasurers. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall each hold office until his successor shall have been
duly elected and qualified, and all other officers shall hold office at the
please of the Trustees. The Secretary and Treasurer shall not be held by the
same person. The President shall hold no other office. Except as above provided,
any two offices may be held by the same person. Any officer may be but none need
be a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer without cause, by a vote of a majority of
the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointment officer or
committee.
4
<PAGE>
Section 4. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control of
the Trustees and to the control of any Committees of the Trustees, within their
respective spheres, as provided by the Trustees, he shall at all times exercise
a general supervision and direction over the affairs of the Trust. He shall have
the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. He shall also have the power to grant,
issue, execute or sign such powers of attorney, proxies or other documents as
may be deemed advisable or necessary in furtherance of the interest of the
Trust. The President shall have such other powers and duties, as from time to
time may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any other powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. He shall deliver
all funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ pursuant to Article X of these By-Laws. He shall render a
statement of condition of the finances of the Trust to the Trustees as often as
they shall require the same and he shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required so to do by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provided for that purpose; he shall have custody of the seal of the Trust;
he shall have charge of the Share transfer books, lists and records unless the
same are in the charge of the Transfer Agent. He shall attend to the giving and
serving of all notices by the Trust in accordance wit the provisions of these
By-Laws and as required by law; and subject to these By-Laws, he shall in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required so to do by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
5
<PAGE>
Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees. Subject to any
applicable provisions of the Declaration, the compensation of the officers and
Trustees shall be fixed from time to time by the Trustees or, in the case of
officers, by any Committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation as
such officer by reason of the fact that he is also a Trustee.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of July in
each year and shall end on the thirtieth day of June in each year, provided,
however, that the Trustees may from time to time change the fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. A notice shall be deemed to have
been telegraphed, cabled or wirelessed for the purposes of these By-Laws when it
has been delivered to a representative of any telegraph, cable or wireless
company with instructions that it be telegraphed, cabled or wirelessed.
ARTICLE X
CUSTODY OF SECURITIES
Section 1 Employment of a Custodian. The Trust shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments included in the
Trust Property. The Custodian (and any sub-custodian) shall be a bank having not
less than $2,000,000 aggregate capital, surplus and undivided profits and shall
be appointed from time to time by the Trustees, who shall fix its remuneration.
6
<PAGE>
Section 2 Action Upon Termination of Custodian Agreement. Upon
termination of a Custodian Agreement or inability of the Custodian to Continue
to serve, the Trustees shall promptly appoint a successor custodian, but in the
event that no successor custodian can be found who has the required
qualifications and is willing to serve, the Trustees shall call as promptly as
possible a special meeting of the Shareholders to determine whether the Trust
shall function without a custodian or shall be liquidated. If so directed by
vote of the holders of a majority of the outstanding voting securities, the
Custodian shall deliver and pay over all Trust Property held by it as specified
in such vote.
Section 3 Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
Custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
Section 4 Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the Custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted by (a) vote of a majority of the Shares outstanding
and entitled to vote or (b) by the Trustees, provided, however, that no By-Law
may be amended, adopted or repealed by the Trustees if such amendment, adoption
or repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of
the Shareholders.
ARTICLE XII
MISCELLANEOUS
(A) Except as hereinafter provided, no officer or Trustees of the Trust
and no partner, officer, director or shareholder of the Investment Adviser of
the Trust (as that term is defined in the Investment Company Act of 1940) or of
the underwriter of the Trust, and no Investment Adviser or underwriter of the
Trust, shall take long or short positions in the securities issued by the Trust.
7
<PAGE>
(1) The foregoing provisions shall not prevent the underwriter
from purchasing Shares from the Trust if such purchases are limited
(except for reasonable allowances for clerical errors, delays and
errors of transmission and cancellation of orders) to purchase for the
purpose of filling orders for such Shares received by the underwriter,
and provided that orders to purchase from the Trust are entered with
the Trust or the Custodian promptly upon receipt by the underwriter of
purchase orders for such Shares, unless the underwriter is otherwise
instructed by its customer.
(2) The foregoing provision shall not prevent the
underwriter from purchasing Shares of the Trust as agent for the
account of the Trust.
(3) The foregoing provisions shall not prevent the purchase
from the Trust or from the underwriter of Shares issued by the Trust,
by any officer, or Trustee of the Trust or by any partner, officer,
director or shareholder of the Investment Adviser of the Trust or of
the underwriter of the Trust at the price available to the public
generally at the moment of such purchase, or as described in the then
currently effective Prospectus of the Trust.
(4) The foregoing shall not prevent the Investment adviser, or
any affiliate thereof, of the Trust from purchasing Shares prior to the
effectiveness of the first registration statement relating to the
Shares under the Securities act of 1933.
(B) The Trust shall not land assets of the Trust to any officer or
Trustee of the Trust, or to any partner, officer, director or shareholder of, or
person financially interested in, the Investment Adviser of the Trust, or the
underwriter of the Trust, or to the Investment Adviser of the Trust or to the
underwriter of the Trust.
(C) The Trust shall not impose any restrictions upon the transfer of
the Shares of the Trust except as provided in the Declaration, but this
requirement shall not prevent the charging of customary transfer agent fees.
(D) The Trust shall not permit any officer or Trustee of the Trust, or
any partner, officer or director of the Investment Adviser or underwriter of the
Trust to deal for or on behalf of the Trust with himself as principal or agent,
or with any partnership, association or corporation in which he has a financial
interest; provided that the foregoing provisions shall not prevent (a) officers
and Trustees of the Trust or partners, officers or directors of the Investment
Adviser or underwriter of the Trust from buying, holding or selling shares in
the Trust, or from being partners, officers or directors or otherwise
financially interested in the Investment Adviser or underwriter of the Trust;
(b) purchases or sales of securities or other property by the Trust from or to
an affiliated person or to the Investment Advisers or underwriters of the Trust
if such transaction is exempt from the applicable provisions of the 1940 Act;
(c) purchases of investments for the portfolio of the Trust or sales of
investments owned by the Trust through a security dealer who is, or one or more
of whose partners, shareholders, officers or directors is, an officer or Trustee
of the Trust, or a partner, officer or director of the Investment Adviser or
underwriter of the Trust, if such transactions are handled in the capacity of
broker only and
8
<PAGE>
commissions charged do not exceed customary brokerage charges for such services;
(d) employment of legal counsel, registrar, Transfer Agent, dividend disbursing
agent or Custodian who is, or has a partner, shareholder, officer, or director
who is, an officer or Trustee of the Trust, or a partner, officer or director of
the Investment Adviser or underwriter of the Trust, if only customary fees are
charged for services to the Trust; (e) sharing statistical research, legal and
management expenses and office hire and expenses with any other investment
company in which an officer or Trustee of the Trust, or a partner, officer or
director of the Investment Adviser or underwriter of the Trust, is an officer or
director or otherwise financially interested.
END OF BY-LAWS
9
<PAGE>
Exhibit 2(b)
BY-LAWS
OF
NORTHSTAR TRUST
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - OFFICES
Section 1. Resident Agent 1
Section 2. Offices 1
ARTICLE III - SHAREHOLDERS 1
Section 1. Meetings 1
Section 2. Notice of Meetings 2
Section 3. Record Date for Meetings and Other
Purposes 2
Section 4. Proxies 2
Section 5. Inspection of Records 3
Section 6. Action without Meeting 3
ARTICLE IV - TRUSTEES 3
Section 1. Meetings of the Trustees 3
Section 2. Quorum and Manner of Acting 4
ARTICLE V - COMMITTEES 4
Section 1. Executive and Other Committees 4
Section 2. Meetings, Quorum and Manner of Acting 4
Section 3. Chairman 5
ARTICLE VI - OFFICERS 5
Section 1. General Provisions 5
Section 2. Term of Office and Qualifications 5
Section 3. Removal 5
Section 4. Powers and Duties of the President 6
Section 5. Powers and Duties of Vice Presidents 6
Section 6. Powers and Duties of the Treasurer 6
Section 7. Powers and Duties of the Secretary 6
Section 8. Powers and Duties of Assistant Treasurers 7
Section 9. Powers and Duties of Assistant Secretaries 7
Section 10. Compensation of Officers and Trustees 7
ARTICLE VII - FISCAL YEAR 7
ARTICLE VIII - SEAL 7
<PAGE>
ARTICLE IX - WAIVERS OF NOTICE 8
ARTICLE X - CUSTODY OF SECURITIES
Section 1. Employment of a Custodian 8
Section 2. Action Upon Termination of
Custodian Agreement 8
Section 3. Central Certificate System 8
Section 4. Acceptance of Receipts in Lieu
of Certificate 9
ARTICLE XI - AMENDMENTS 9
ARTICLE XII - MISCELLANEOUS 9
<PAGE>
BY-LAWS OF NORTHSTAR TRUST
ARTICLE I
DEFINITIONS
The terms "Administrator", "Class", "Commission", "Custodian", "Declaration",
"Distributor", "His", "Interested Person", "Investment Adviser", "Municipal
Bonds", "1940 Act", "Person", "Series", "Shareholder", "Shareholder Servicing
Agent", "Shares", "Transfer Agent", "Trust", "Trust Property", "Trustees", and
"vote of a majority of the shares outstanding and entitled to vote", have the
respective meanings given them in the Declaration of Trust - Northstar Series
Trust dated August 18, 1993, as amended from time to time.
ARTICLE II
RESIDENT AGENT/OFFICES
Section 1. Resident Agent. The Trust shall maintain a resident agent in
the Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may designate
a successor resident agent, provided, however, that such appointment shall not
become effective until written notice thereof is delivered to the office of the
Secretary of the Commonwealth.
Section 2. Offices. The Trust may have its principal office and other
offices in such places without as well as within the Commonwealth of
Massachusetts as the Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. A meeting of Shareholders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request, which shall specify the purpose or purposes for which such
meeting is to be called, of Shareholders holding in the aggregate not less than
10% of the outstanding shares entitled to vote on the matters specified in such
written request. Any such meeting shall be held as provided in the Declaration
at such place within or without the Commonwealth of Massachusetts as the
Trustees shall designate. The holders of a majority of outstanding shares
present in person or by proxy shall constitute a quorum at any meeting of the
Shareholders. In the absence of a quorum, a majority of outstanding shares
entitled to vote present in person or by proxy may adjourn the meeting from time
to time until a quorum shall be present.
Section 2. Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail to each Shareholder at his address as recorded on
the register of the Trust mailed at least (10) days and
1
<PAGE>
not more than sixty (60) days before the meting. Only the business stated in the
notice of the meeting shall be considered at such meeting. Any adjourned meeting
may be held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose
of determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than
sixty (60) days prior to the date of any meeting of Shareholders or distribution
or other action as a record date for the determinations of the persons to be
treated as Shareholders of record for such purposes, except for dividend
payments which shall be governed by the Declaration.
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent for the Trust as the Secretary
may direct, for verification prior to the time at which such vote shall be
taken. Proxies may be solicited in the name of one or more Trustees or one or
more of the officers of the Trust. Only Shareholders of record shall be entitled
to vote. Each whole share shall be entitled to one vote as to any matter on
which it is entitled by the Declaration to vote, and each fractional share shall
be entitled to a proportionate fractional vote. When any Share is held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Share, but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such share is a minor or a person of unsound mind, and subject to
guardianship or the legal control of any other person as regards the charge or
management of such shares, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy.
Section 5. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting of a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consents shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
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ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular of stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the President,
or by any one of the Trustees, at the time being in office. Notice of meetings
shall be given by the Secretary or an Assistant Secretary or by the officer or
Trustees that called the meeting and shall be mailed to each Trustee at least
two days before the meeting, or shall be telegraphed, cabled, or wirelessed to
each Trustee at his business address, or personally delivered to him at least
one day before the meeting. Such notice may, however, be waived by any Trustee.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him before or after the meeting, is filed with the records
of the protesting prior thereto or at its commencement the lack of notice to
him. A notice or waiver of notice need not specify the purpose of any meeting.
The Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting shall be deemed to have been held at a place designated by the Trustees
at the meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
by the Trustees without a meeting if all the Trustees consent to the action in
writing and the written consents are filed with the records of the Trustees
meetings. Such consents shall be treated as a vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees
shall be present in person at any regular or special meeting of the Trustees in
order to constitute a quorum for the transaction of business at such meeting and
(except as otherwise required by law, the Declaration of these By-Laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust, and such other powers of the
Trustees as the Trustees may, from time to time, delegate to them except those
powers which by law, the Declaration or these By-Laws they are prohibited from
delegating. The Trustees may also elect from their own number other Committees
from time to time, the number composing such Committees, the powers conferred
upon the same (subject to the same limitations as with respect to the Executive
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Committee) and the term of membership on such Committees to be determined by the
Trustees. The Trustees may designate a chairman of any such Committee. In the
absence of such designation the Committee may elect its own Chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.
The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the office of the Trust.
Section 3. Chairman. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successors shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as from time to time may be assigned to him by the Trustees.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Secretaries, and one or more Assistant Treasurers. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall each hold office until his successor shall have been
duly elected and qualified, and all other officers shall hold office at the
please of the Trustees. The Secretary and Treasurer shall not be held by the
same person. The President shall hold no other office. Except as above provided,
any two offices may be held by the same person. Any officer may be but none need
be a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer without cause, by a vote of a majority of
the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointment officer or
committee.
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Section 4. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control of
the Trustees and to the control of any Committees of the Trustees, within their
respective spheres, as provided by the Trustees, he shall at all times exercise
a general supervision and direction over the affairs of the Trust. He shall have
the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. He shall also have the power to grant,
issue, execute or sign such powers of attorney, proxies or other documents as
may be deemed advisable or necessary in furtherance of the interest of the
Trust. The President shall have such other powers and duties, as from time to
time may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any other powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. He shall deliver
all funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ pursuant to Article X of these By-Laws. He shall render a
statement of condition of the finances of the Trust to the Trustees as often as
they shall require the same and he shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required so to do by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provided for that purpose; he shall have custody of the seal of the Trust;
he shall have charge of the Share transfer books, lists and records unless the
same are in the charge of the Transfer Agent. He shall attend to the giving and
serving of all notices by the Trust in accordance wit the provisions of these
By-Laws and as required by law; and subject to these By-Laws, he shall in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required so to do by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
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Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees. Subject to any
applicable provisions of the Declaration, the compensation of the officers and
Trustees shall be fixed from time to time by the Trustees or, in the case of
officers, by any Committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation as
such officer by reason of the fact that he is also a Trustee.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of July in
each year and shall end on the thirtieth day of June in each year, provided,
however, that the Trustees may from time to time change the fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. A notice shall be deemed to have
been telegraphed, cabled or wirelessed for the purposes of these By-Laws when it
has been delivered to a representative of any telegraph, cable or wireless
company with instructions that it be telegraphed, cabled or wirelessed.
ARTICLE X
CUSTODY OF SECURITIES
Section 1 Employment of a Custodian. The Trust shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments included in the
Trust Property. The Custodian (and any sub-custodian) shall be a bank having not
less than $2,000,000 aggregate capital, surplus and undivided profits and shall
be appointed from time to time by the Trustees, who shall fix its remuneration.
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Section 2 Action Upon Termination of Custodian Agreement. Upon
termination of a Custodian Agreement or inability of the Custodian to Continue
to serve, the Trustees shall promptly appoint a successor custodian, but in the
event that no successor custodian can be found who has the required
qualifications and is willing to serve, the Trustees shall call as promptly as
possible a special meeting of the Shareholders to determine whether the Trust
shall function without a custodian or shall be liquidated. If so directed by
vote of the holders of a majority of the outstanding voting securities, the
Custodian shall deliver and pay over all Trust Property held by it as specified
in such vote.
Section 3 Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
Custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
Section 4 Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the Custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted by (a) vote of a majority of the Shares outstanding
and entitled to vote or (b) by the Trustees, provided, however, that no By-Law
may be amended, adopted or repealed by the Trustees if such amendment, adoption
or repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of
the Shareholders.
ARTICLE XII
MISCELLANEOUS
(A) Except as hereinafter provided, no officer or Trustees of the Trust
and no partner, officer, director or shareholder of the Investment Adviser of
the Trust (as that term is defined in the Investment Company Act of 1940) or of
the underwriter of the Trust, and no Investment Adviser or underwriter of the
Trust, shall take long or short positions in the securities issued by the Trust.
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(1) The foregoing provisions shall not prevent the underwriter
from purchasing Shares from the Trust if such purchases are limited
(except for reasonable allowances for clerical errors, delays and
errors of transmission and cancellation of orders) to purchase for the
purpose of filling orders for such Shares received by the underwriter,
and provided that orders to purchase from the Trust are entered with
the Trust or the Custodian promptly upon receipt by the underwriter of
purchase orders for such Shares, unless the underwriter is otherwise
instructed by its customer.
(2) The foregoing provision shall not prevent the underwriter
from purchasing Shares of the Trust as agent for the account of the
Trust.
(3) The foregoing provisions shall not prevent the purchase
from the Trust or from the underwriter of Shares issued by the Trust,
by any officer, or Trustee of the Trust or by any partner, officer,
director or shareholder of the Investment Adviser of the Trust or of
the underwriter of the Trust at the price available to the public
generally at the moment of such purchase, or as described in the then
currently effective Prospectus of the Trust.
(4) The foregoing shall not prevent the Investment adviser, or
any affiliate thereof, of the Trust from purchasing Shares prior to the
effectiveness of the first registration statement relating to the
Shares under the Securities act of 1933.
(B) The Trust shall not land assets of the Trust to any officer or
Trustee of the Trust, or to any partner, officer, director or shareholder of, or
person financially interested in, the Investment Adviser of the Trust, or the
underwriter of the Trust, or to the Investment Adviser of the Trust or to the
underwriter of the Trust.
(C) The Trust shall not impose any restrictions upon the transfer of
the Shares of the Trust except as provided in the Declaration, but this
requirement shall not prevent the charging of customary transfer agent fees.
(D) The Trust shall not permit any officer or Trustee of the Trust, or
any partner, officer or director of the Investment Adviser or underwriter of the
Trust to deal for or on behalf of the Trust with himself as principal or agent,
or with any partnership, association or corporation in which he has a financial
interest; provided that the foregoing provisions shall not prevent (a) officers
and Trustees of the Trust or partners, officers or directors of the Investment
Adviser or underwriter of the Trust from buying, holding or selling shares in
the Trust, or from being partners, officers or directors or otherwise
financially interested in the Investment Adviser or underwriter of the Trust;
(b) purchases or sales of securities or other property by the Trust from or to
an affiliated person or to the Investment Advisers or underwriters of the Trust
if such transaction is exempt from the applicable provisions of the 1940 Act;
(c) purchases of investments for the portfolio of the Trust or sales of
investments owned by the Trust through a security dealer who is, or one or more
of whose partners, shareholders, officers or directors is, an officer or Trustee
of the Trust, or a partner, officer or director of the Investment Adviser or
underwriter of the Trust, if such transactions are handled in the capacity of
broker only and
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commissions charged do not exceed customary brokerage charges for such services;
(d) employment of legal counsel, registrar, Transfer Agent, dividend disbursing
agent or Custodian who is, or has a partner, shareholder, officer, or director
who is, an officer or Trustee of the Trust, or a partner, officer or director of
the Investment Adviser or underwriter of the Trust, if only customary fees are
charged for services to the Trust; (e) sharing statistical research, legal and
management expenses and office hire and expenses with any other investment
company in which an officer or Trustee of the Trust, or a partner, officer or
director of the Investment Adviser or underwriter of the Trust, is an officer or
director or otherwise financially interested.
END OF BY-LAWS
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Exhibit 9(a)
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 4th day of December, 1994, is by and
between NORTHSTAR ADVANTAGE TRUST (the "Fund"), organized under the laws of
Massachusetts and having its principal place of business at Two Pickwick Plaza,
Greenwich, Connecticut 06830 and THE SHAREHOLDER SERVICES GROUP, INC. (the
"Transfer Agent"), a Massachusetts corporation with principal offices at One
Exchange Place, 53 State Street, Boston, Massachusetts 02109.
WITNESSETH
WHEREAS, the Fund is authorized to issue Shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund initially intends to offer shares in those Portfolios
identified in the attached Exhibit 1, each such Portfolio, together with all
other Portfolios subsequently established by the Fund shall be subject to this
Agreement in accordance with Section 16;
WHEREAS, the Fund on behalf of the Portfolios, desires to appoint the
Transfer Agent as its transfer agent, dividend disbursing agent and agent in
connection with certain other activities and the Transfer Agent desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
Article 1 Definitions
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not such
person is an officer or employee of the Fund, duly authorized to give
Oral Instructions or Written Instructions on behalf of the Fund as
indicated in writing to the Transfer Agent from time to time.
(c) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
<PAGE>
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(f) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(g) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by the Transfer Agent from a
person reasonably believed by the Transfer Agent to be an Authorized
Person.
(h) "Portfolio" shall mean each separate series of shares
offered by the Fund representing interest in a separate portfolio of
securities and other assets.
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Fund as may be issued from time to
time.
(k) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by the Transfer Agent to be an
Authorized Person and actually received by the Transfer Agent. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually
executed original or other process.
Article 2 Appointment of the Transfer Agent
2.1 The Fund, on behalf of the Portfolios, hereby appoints and
constitutes the Transfer Agent as transfer agent and dividend disbursing agent
for Shares of each respective Portfolio of the Fund and as shareholder servicing
agent for the Fund and the Transfer Agent hereby accepts such appointments and
agrees to perform the duties hereinafter set forth.
Article 3 Duties of the Transfer Agent
3.1 The Transfer Agent shall be responsible for:
(a) Administering and/or performing the customary services of
a transfer agent; service agent in connection with dividend and
distribution functions; and for
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performing shareholder account and administrative agent functions in
connection with the issuance, transfer and redemption or repurchase
(including coordination with the Custodian) of Shares of each
Portfolio, as more fully described in the written schedule of Duties
of the Transfer Agent annexed hereto as Schedule A and incorporated
herein, and in accordance with the terms of the Prospectus of the Fund
on behalf of the applicable Portfolio, applicable law and the
procedures established from time to time between the Transfer Agent
and the Fund.
(b) Recording the issuance of Shares and maintaining pursuant
to SEC Rule 17Ad-10(e) a record of the total number of Shares of each
Portfolio which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. The Transfer Agent shall provide the
Fund on a regular basis with the total number of Shares of each
Portfolio which are authorized ad issued and outstanding and shall have
no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to
the issue or sale of such Shares, which functions shall be the sole
responsibility of the Fund.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares,
or the propriety of the amount to be paid therefor; (iii) the legality
of the declaration of any dividend by the Board of Directors, or the
legality of the issuance of any Shares in payment of any dividend; or
(iv) the legality of any recapitalization or readjustment of the
Shares.
3.2 In addition, the Fund shall (i) identify to the Transfer Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Transfer Agent for the Fund's
blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and the
resorting of such transactions to the Fund as provided above.
3.3 In addition to the duties set forth herein, the Transfer Agent
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and the Transfer Agent.
Article 4 Recordkeeping and Other Information
4.1 The Transfer Agent shall create and maintain all records required
of it pursuant to its duties hereunder and as set forth in Schedule A in
accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. All records shall be available during
regular business hours for inspection and use by the Fund. Where applicable,
such records shall be maintained by the Transfer Agent for the periods and in
the places required by Rule 31a-2 under the 1940 Act.
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4.2 To the extent required by Section 31 of the 1940 Act, the Transfer
Agent agrees that all such records prepared or maintained by the Transfer Agent
relating to the services to be performed by the Transfer Agent hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such section, and will be surrendered promptly to the Fund on
and in accordance with the Fund's request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund of such request and secure Written Instructions as to the handling of such
request. The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable of the failure to comply with such request.
4.4 Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Fund, or any person retained by the Fund as may
be necessary for the Fund to evaluate the quality of the services performed by
the Transfer Agent pursuant hereto.
Article 5 Fund Instructions
5.1 The Transfer Agent will have no liability when acting upon Written
or Oral Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. The Transfer Agent will also have no liability when processing Share
certificates which it reasonably believes to bear the proper manual or facsimile
signatures of the officers of the Fund and the proper countersignature of the
Transfer Agent.
5.2 At any time, the Transfer Agent may request Written Instructions
from the Fund and may seek advice from legal counsel for the Fund, or its own
legal counsel, with respect to any matter arising in connection with this
Agreement, and it shall not be liable for any action taken or not taken or
suffered by it is good faith in accordance with such Written Instructions or in
accordance with the opinion of counsel for the Fund or for the Transfer Agent.
Written Instructions requested by the Transfer Agent will be provided by the
Fund within a reasonable period of time.
5.3 The Transfer Agent, its officers, agents or employees, shall accept
Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect the Transfer Agent's right
to rely on Oral Instructions.
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Article 6 Compensation
6.1 The Fund on behalf of each of the Portfolios will compensate the
Transfer Agent for the performance of its obligations hereunder in accordance
with the fees set forth in the written Fee Schedule annexed hereto as Schedule B
and incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the Fund
on behalf of each of the Portfolios agrees to pay, and will be billed separately
for, out-of-pocket expenses incurred by the Transfer Agent in the performance of
its duties hereunder. Out-of-pocket expenses shall include, but shall not be
limited to, the items specified in the written schedule of out-of-pocket charges
annexed hereto as Schedule C and incorporated herein. Schedule B may be modified
by written agreement between the parties. Unspecified out-of-pocket expenses
shall be limited to those out-of-pocket expenses reasonably incurred by the
Transfer Agent in the performance of its obligations hereunder.
6.3 The Fund on behalf of each of the Portfolios agrees to pay all fees
and out-of-pocket expenses within fifteen (15) days following the receipt of the
respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule B, a revised Fee Schedule executed and dated by
the parties hereto.
Article 7 Documents
7.1 In connection with the appointment of the Transfer Agent, the Fund
shall, on or before the date this Agreement goes into effect, but in any case
within a reasonable period of time for the Transfer Agent to prepare to perform
its duties hereunder, deliver or caused to be delivered to the Transfer Agent
the documents set forth in the written schedule of Fund Documents annexed hereto
as Schedule D.
Article 8 Transfer Agent System
8.1 The Transfer Agent shall retain title to and ownership of any and
all data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by the Transfer Agent in connection with
the services provided by the Transfer Agent to the Fund herein (the "Transfer
Agent System").
8.2 The Transfer Agent hereby grants to the Fund a limited license to
the Transfer Agent System for the sole and limited purpose of having the
Transfer Agent provide the services contemplated hereunder and nothing contained
in this Agreement shall be construed or interpreted otherwise and such license
shall immediately terminate with the termination of this Agreement.
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Article 9 Representations and Warranties of the Transfer Agent
9.1 The Transfer Agent represents and warrants to the Fund that:
(a) It is a corporation duly organized and existing and in
good standing under the laws of the Commonwealth of Massachusetts;
(b) It is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(c) All requisite corporate proceedings have been taken to
authorize it to enter into this Agreement;
(d) It is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in effect
for the duration of this Agreement;
(e) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
Article 11 Representations and Warranties of the Fund
11.1 The Fund represents and warrants to the Transfer Agent that:
(a) It is duly organized and existing and in good standing
under the laws of the jurisdiction in which it is organized;
(b) It is empowered under applicable laws and by its Articles
of Incorporation and By-Laws and applicable laws to enter into this
Agreement;
(c) All corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorize
it to enter into this Agreement;
(d) A registration statement under the Securities Act of 1933,
as amended on behalf of each of the Portfolios is currently effective
and will remain effective, and all appropriate state securities law
filings have been made and will continue to be made, with respect to
all Shares of the Fund being offered for sale;
(e) All outstanding Shares are validly issued, fully paid and
non-assessable. When Shares are hereafter issued in accordance with the
terms of the Fund's Articles of Incorporation and its Prospectus with
respect to each Portfolio, such Shares shall be validly issued, fully
paid and non-assessable; and
Article 12 Indemnification
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12.1 The Transfer Agent shall not be responsible for and the Fund on
behalf of each Portfolio shall indemnify and hold the Transfer Agent harmless
from and against any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of any sort
or kind which may be asserted against the Transfer Agent or for which the
Transfer Agent may be held to be liable (a "Claim") arising out of or
attributable to any of the following:
(a) Any actions of the Transfer Agent required to be taken
pursuant to this Agreement unless such Claim resulted from a negligent
act or omission to act or bad faith by the Transfer Agent in the
performance of its duties hereunder.
(b) The Transfer Agent's reasonable reliance on, or reasonable
use of information, data, records and documents (including but not
limited to magnetic tapes, computer printouts, hardcopies and microfilm
copies) received by the Transfer Agent from the Fund, or any authorized
third party acting on behalf of the Fund, including but not limited to
the prior transfer agent for the Fund, in the performance of the
Transfer Agent's duties and obligations hereunder.
(c) The reliance on, or the implementation of, any Written or
Oral Instructions or any other instructions or requests of the Fund on
behalf of the applicable Portfolio.
(d) The offer or sales of shares in violation of any
requirement under the securities laws or regulations of any state that
such shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect to the
offer or sale of such shares in such state.
(e) The Fund's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the Fund's negligence
or misconduct or the breach of any representation or warranty of the
Fund made herein.
12.2 In any case in which the Fund may be asked to indemnify or hold
the Transfer Agent harmless, the Transfer Agent will notify the Fund promptly
after identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Fund although the failure to do
so shall not prevent recovery by the Transfer Agent and shall keep the Fund
advised with respect to all developments concerning such situation. The Fund
shall have the option to defend the Transfer Agent against any Claim which may
be the subject of this indemnification, and, in the event that the Fund so
elects, such defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Transfer Agent, and thereupon the Fund shall take over
complete defense of the Claim and the Transfer Agent shall sustain no further
legal or other expenses in respect of such Claim. The Transfer Agent will not
confess any Claim or make any compromise in any case in which the Fund will be
asked to provide indemnification, except with the Fund's prior written consent.
The obligations of the parties hereto under this Section shall survive the
termination of this Agreement.
Article 13 Standard of Care
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13.1 The Transfer Agent shall at all times act in good faith and agrees
to use its best efforts within commercially reasonable limits to ensure the
accuracy of all services performed under this Agreement, but assume no
responsibility for loss or damage to the Fund unless said errors are caused by
the Transfer Agent's own negligence, bad faith or willful misconduct or that of
its employees.
13.2 Notwithstanding the foregoing Section 12(a) or anything else
contained in this Agreement to the contrary, the Transfer Agent's entire
liability to the Fund for any loss or damage, direct or indirect for any cause
whatsoever (including but not limited to those arising out of this Agreement),
and regardless of the form of action, shall be limited to one million dollars
($1,000,000) per Portfolio (maximum three Portfolios).
Article 14 Consequential Damages
14.1 In no event and under no circumstances shall either party to this
Agreement be liable to the other party for consequential or indirect loss of
profits, reputation or business or any other special damages under any provision
of this Agreement or for any act or failure to act hereunder.
Article 15 Term and Termination
15.1 This Agreement shall be effective on the date first written above
and shall continue for a period of five (5) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of three (3) years
("Renewal Terms") each.
15.2 Either party may terminate this Agreement at the end of the
Initial Term or any subsequent Renewal Term upon not less than ninety (90) days
or more than one-hundred eighty (180) days prior written notice to the other
party.
15.3 In the event a termination notice is given by the Fund, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Fund.
15.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If the Transfer Agent is the Non-Defaulting Party, its
termination of this Agreement shall not constitute a waiver of any other rights
or remedies of the Transfer Agent with respect to services performed prior to
such termination or rights of the Transfer Agent to be reimbursed for
out-of-pocket expenses. In all cases, termination by the Non-Defaulting Party
8
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shall not constitute a waiver by the Non-Defaulting Party or any other rights it
might have under this Agreement or otherwise against the Defaulting Party.
Article 16 Additional Portfolios
16.1 In the event that the Fund establishes and/or advises one or more
Portfolios in addition to those identified in Exhibit 1, with respect to which
the Fund desires to have the Transfer Agent render services as transfer agent
under the terms hereof, the Fund shall so notify the Transfer Agent in writing,
and if the Transfer Agent agrees in writing to provide such services, Exhibit 1
shall be amended to include such additional Portfolios.
Article 17 Confidentiality
17.1 In connection with the services provided by the Transfer
Agent hereunder, certain confidential and proprietary information
regarding the Transfer Agent and the Fund may be disclosed
to the other. In connection therewith, the parties agree as follows:
(a) Confidential Information disclosed under this Agreement shall mean:
(i) any data or information that is competitively sensitive material,
and not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance,
operations, customer relationships, customer profiles, sales estimates,
business plans, and internal performance results relating to the past,
present or future business activities of the Transfer Agent or the
Fund, their respective parent corporation, their respective
subsidiaries and affiliated companies and the customers, clients and
suppliers of any of the foregoing;
(ii) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Transfer Agent
or the Fund a competitive advantage over its competitors; and
(iii) all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable or copyrightable.
(b) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment,
prototypes and models, and any other tangible manifestation of the
foregoing which now exist or come into the control or possession of the
party.
17.2 Except as expressly authorized by prior written consent of the disclosing
party ("Discloser"), the party receiving Confidential Information ("Recipient")
shall:
(a) limit access to Discloser's Confidential Information to Recipient's
employees who have a need-to-know in connection with the subject matter
thereof;
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(b) advise those employees who have access to the Confidential
Information of the proprietary nature thereof and of the obligations
set forth in this Confidentiality Agreement;
(c) take appropriate action by instruction or agreement with the
employees having access to Discloser's Confidential Information to
fulfill Recipient's obligations under this Confidentiality Agreement;
(d) safeguard all of Discloser's Confidential Information by using a
reasonable degree of care, but not less than that degree of care used
by Recipient in safeguarding its own similar information or material;
(e) use all of Discloser's Confidential Information solely for purposes
that it was intended;
(f) not disclose any of Discloser's Confidential Information to third
parties; and
(g) not disclose the existence of the discussions to any third party.
17.3 Upon Discloser's request, Recipient shall surrender to Discloser
all memoranda, notes, records, drawings, manuals, records, and other documents
or materials (and all copies of same) relating to or containing Discloser's
Confidential Information. When Recipient returns the materials, Recipient shall
certify in writing that it has returned all materials containing or relating to
the Confidential Information.
17.4 The obligations of confidentiality and restriction on use in this
Article 16 shall not apply to any Confidential Information that Recipient
proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of the
Recipient; or
(b) Was lawfully received by Recipient from a third party free of any
obligation of confidence to the third party; or
(c) Was already in Recipient's possession prior to receipt from
Discloser; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not
limited to, giving Discloser as much advance notice as practical of the
possibility of disclosure to allow Discloser to stop such discloser or
obtain a protective order concerning such disclosure; or
(e) Is subsequently and independently developed by Recipient's
employees, consultants or agents without reference to Confidential
Information.
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17.5 The Fund and the Transfer Agent agree that money damages would not
be a sufficient remedy for breach of this Section 17. Accordingly, in addition
to all other remedies that either party may have, a party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any breach of this Agreement. The parties agree to waive any requirement for a
bond in connection with any such injunctive or other equitable relief.
Article 18 Force Majeure
18.1 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, labor
difficulties, mechanical breakdowns, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes.
Article 19 Amendments
19.1 This Agreement may only be amended or modified by a written
instrument executed by both parties.
Article 20 Subcontracting
20.1 The Fund agrees that the Transfer Agent may, in its discretion,
subcontract for certain of the services described under this Agreement or the
Schedules hereto; provided that the appointment of any such Transfer Agent shall
not relieve the Transfer Agent of its responsibilities hereunder.
Article 21 Arbitration
21.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
21.2 The parties hereby agree that judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction.
21.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Section 20.
Article 22 Notice
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22.1 Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or the Transfer Agent, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Fund:
Northstar Advantage Trust
Two Pickwick Plaza
Greenwich, Connecticut 06830
Attention: Mr. Mark Lipson, President
To the Transfer Agent:
The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President
with a copy to the Transfer Agent's General Counsel
Article 23 Successors
23.1 This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns, provided, however,
that this Agreement shall not be assigned to any person other than a person
controlling, controlled by or under common control with the assignor without the
written consent of the other party, which consent shall not be unreasonably
withheld.
Article 24 Governing Law
24.1 This Agreement shall be governed exclusively by the laws of the
Commonwealth of Massachusetts without reference to the choice of law provisions
thereof. Each party hereto hereby (i) consents to the personal jurisdiction of
the Commonwealth of Massachusetts courts over the parties hereto, hereby waiving
any defense of lack of personal jurisdiction; and (iii) appoints the person to
whom notices hereunder are to be sent as agent for service of process.
Article 25 Counterparts
25.1 this Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original; but such counterparts shall,
together, constitute only one instrument.
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Article 26 Captions
26.1 The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 27 Use of Transfer Agent/Fund Name
27.1 The Fund shall not use the name of the Transfer Agent in any
Prospectus, Statement of Additional Information, Shareholder's report, sales
literature or other material relating to the Fund in a manner not approved prior
thereto in writing; provided, that the Transfer Agent need only receive notice
of all reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by any government agency or
applicable law or rule.
27.2 The Transfer Agent shall not use the name of the Fund or material
relating to the Fund on any documents or forms for other than internal use in a
manner not approved prior thereto in writing; provided, that the Fund need only
receive notice of all reasonable uses of its name which merely refer in accurate
terms to the appointment of the Transfer Agent or which are required by any
government agency or applicable law or rule.
Article 28 Relationship of Parties
28.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 29 Entire Agreement; Severability
29.1 This Agreement and the Schedules attached hereto constitute the
entire agreement of the parties hereto relating to the matters covered hereby
and supersede any previous agreements. If any provision is held to be illegal,
unenforceable or invalid for any reason, the remaining provisions shall not be
affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
NORTHSTAR ADVANTAGE TRUST:
By:______________________________
Title:_____________________________
THE SHAREHOLDER SERVICES GROUP, INC.:
By:______________________________
Title:_____________________________
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EXHIBIT 1
Northstar Advantage Income and Growth Fund (A, B, C)
Northstar Advantage Multi-Sector Bond Fund (A, B, C)
Northstar Advantage High Total Return Fund (A, B, C)
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SCHEDULE A
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent shall maintain a record
of the number of Shares held by each Shareholder of record which shall include
name, address, taxpayer identification and which shall indicate whether such
Shares are held in certificates or uncertificated form.
2. Shareholder Services. The Transfer Agent shall respond as
appropriate to all inquiries and communications from Shareholders relating to
Shareholder accounts with respect to its duties hereunder and as may be from
time to time mutually agreed upon between the Transfer Agent and the Fund.
3. Share Certificates.
(a) At the expense of the Fund, the Fund shall supply the
Transfer Agent with an adequate supply of blank share certificates to meet the
Transfer Agent requirements therefor. Such Share certificates shall be properly
signed by facsimile. The Fund agrees that, notwithstanding the death,
resignation, or removal of any officer of the Fund whose signature appears on
such certificates, the Transfer Agent or its agent may continue to countersign
certificates which bear such signatures until otherwise directed by Written
Instructions.
(b) The Transfer Agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or destroyed,
upon receipt by the Transfer Agent of properly executed affidavits and lost
certificate bonds, in form satisfactory to the Transfer Agent, with the Fund and
the Transfer Agent as obligees under the bond.
(c) The Transfer Agent shall also maintain a record of each
certificate issued, the number of Shares represented thereby and the Shareholder
of Record. With respect to Shares held in open accounts or uncertificated form
(i.e., no certificate being issued with respect thereto) the Transfer Agent
shall maintain comparable records of the Shareholders thereof, including their
names, addresses and taxpayer identification. The Transfer Agent shall further
maintain a stop transfer record on lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent will address and mail to Shareholders of the Fund, all reports to
Shareholders, dividend and distribution notices and proxy material for the
Fund's meetings of Shareholders. In connection with meetings of Shareholders,
the Transfer Agent will prepare Shareholder lists, mail and certify as to the
mailing of proxy materials, process and tabulate returned proxy cards, report on
proxies voted prior to meetings, act as inspector of election at meetings and
certify Shares voted at meetings.
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5. Sales of Shares
(a) The Transfer Agent shall not be required to issue any
Shares of the Fund where it has received a Written Instruction from the Fund or
official notice from any appropriate authority that the sale of the Shares of
the Fund has been suspended or discontinued. The existence of such Written
Instructions or such official notice shall be conclusive evidence of the right
of the Transfer Agent to rely on such Written Instructions or official notice.
(b) In the event that any check or other order for the payment
of money is returned unpaid for any reason, the Transfer Agent will endeavor to:
(i) give prompt notice of such return to the Fund or its disignee; (ii) place a
stop transfer order against all Shares issued as a result of such check or
order; and (iii) take such actions as the Transfer Agent may from time to time
deem appropriate.
6. Transfer and Repurchase
(a) The Transfer Agent shall process all requests to transfer
or redeem Shares in accordance with the transfer or repurchase procedures set
forth in the Fund's Prospectus.
(b) The Transfer Agent will transfer or repurchase Shares upon
receipt of Oral or Written Instructions or otherwise pursuant to the Prospectus
and Share certificates, if any, properly endorsed for transfer or redemption,
accompanied by such documents as the Transfer Agent reasonably may deem
necessary.
(c) The Transfer Agent reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on the
instructions is valid and genuine. The Transfer Agent also reserves the right to
refuse to transfer or repurchase Shares until it is satisfied that the requested
transfer or repurchase is legally authorized, and it shall incur no liability
for the refusal, in good faith, to make transfers or repurchases which the
Transfer Agent, in its good judgment, deems improper or unauthorized, or until
it is reasonably satisfied that there is no basis to any claims adverse to such
transfer or repurchase.
(d) When Shares are redeemed, the Transfer Agent shall, upon
receipt of the instructions and documents in proper form, deliver to the
Custodian and the Fund or its designee a notification setting forth the number
of Shares to be repurchased. Such repurchased shares shall be reflected on
appropriate accounts maintained by the Transfer Agent reflecting outstanding
Shares of the Fund and Shares attributed to individual accounts.
(e) The Transfer Agent, upon receipt of the monies paid to it
by the Custodian for the repurchase of Shares, pay such monies as are received
from the Custodian, all in accordance with the procedures described in the
written instruction received by the Transfer Agent from the Fund.
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(f) The Transfer Agent shall not process or effect any
repurchase with respect to Shares of the Fund after receipt by the Transfer
Agent or its agent of notification of the suspension of the determination of the
net asset value of the Fund.
7. Dividends
(a) Upon the declaration of each dividend and each capital
gains distribution by the Board of Directors of the Fund with respect to Shares
of the Fund, the Fund shall furnish or cause to be furnished to the Transfer
Agent Written Instructions setting forth the date of the declaration of such
dividend or distribution, the ex-dividend date, the date of payment thereof, the
record date as of which Shareholders entitled to payment shall be determined,
the amount payable per Share to the Shareholders of record as of that date, the
total amount payable to the Transfer Agent on the payment date and whether such
dividend or distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution
of the Board of Directors, the Fund will pay to the Transfer Agent sufficient
cash to make payment to the Shareholders of record as of such payment date.
(c) If the Transfer Agent does not receive sufficient cash
from the Fund to make total dividend and/or distribution payments to all
Shareholders of the Fund as of the record date, the Transfer Agent will, upon
notifying the Fund, withhold payment to all Shareholders of record as of the
record date until sufficient cash is provided to the Transfer Agent.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, the Transfer Agent shall: (i) perform all the
customary services of a transfer agent, registrar, dividend disbursing agent and
agent of the dividend reinvestment and cash purchase plan as described herein
consistent with those requirements in effect as at the date of this Agreement.
The detailed definition, frequency, limitations and associated costs (if any)
set out in the attached fee schedule, include but are not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, tabulating proxies, mailing Shareholder reports to current
Shareholders, withholding taxes on U.S. resident and non-resident alien accounts
where applicable, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
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SCHEDULE B
FEE SCHEDULE
The fees set forth herein shall apply jointly to each of the mutual funds
sponsored, managed or advised by Northstar Investment Management Corporation or
its affiliates (collectively, the "Funds") that have appointed The Shareholder
Services Group, Inc. ("TSSG") as transfer agent.
I. Fees
Class A, B, C
With respect to Class A, B, and C Shares, the Funds shall jointly pay TSSG an
annualized fee as detailed below.
ASSET LEVEL NETWORK LEVEL III ASSETS NON-NETWORKED ASSETS
1st 500 million 12.5 b.p. 15.0 b.p.
Next 500 million 11.0 b.p. 13.5 b.p.
Next 500 million 9.5 b.p. 12.0 b.p.
Over 1.5 billion 8.0 b.p. 10.5 b.p.
TSSG's fees will be discounted to a rate of 12.0 b.p. on all assets until
12/3/95.
After 12/3/95, asset based breakpoints will be applied specifically to each
asset category (re: networked vs. non-networked).
TSSG's fees shall be billed by TSSG monthly in arrears on a prorated basis of
1/12 of the annualized fee based on average net assets for the month in each
category (i.e. networked vs. non-networked).
Class T
With respect to Class T shares, the Funds shall jointly pay TSSG an annualized
fee as detailed below.
o Actual fees will be determined based on final approval of TSSG's Fees
by the Funds' board. The Funds will provide TSSG with the portion of
the minutes of the board meeting applicable to the fee discussion.
However, in no instance will fees fall below the current level of:
Strategic Income $8.00
Government Securities $8.00
High Yield Bond $8.00
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Income Fund $6.75
Growth Fund $6.75
Special Fund $6.75
o A separate Sub Transfer Agency agreement will be executed between TSSG
and Advest Transfer Services, Inc. TSSG will pay Advest Transfer
Services, Inc. $3.00 per internal account and $6.00 per external
account, payable annually for each position held by them.
o TSSG's fees shall be billed by TSSG monthly in arrears on a prorated
basis of 1/12 of the annualized fee based on number of open accounts
per Fund.
II. Retirement Plan Fees
o The Funds shall also pay TSSG an annual per account charge for each
retirement account maintained by TSSG at a rate of $10.00 per account
number. Specifically, if a shareowner maintains a retirement account
with the same account number across multiple Funds, TSSG will be paid
$10.00
III. Start-up Costs
o TSSG will provide a reconciliation of the remaining start-up costs
(total cost $253,000) by December 11, 1995.
o Since Funds have moved their fund accounting business to TSSG, TSSG
will forgive $75,000 of the $253,000 conversion costs.
o The reconciliation will reflect actual revenues generated in year one
(12/4/94-12/3/95) as a result of two increases to the basis point
agreement as noted below:
1. 7.5 b.p. to 10 b.p. (Offset start-up costs)
2. 10 b.p. to 12 b.p. (Cover conversion payment)
o If the Funds (excluding Class T shares) collectively achieve an average
asset balance of $350 M for year one (12/4/94-12/3/95), TSSG will
forgive up to a maximum of 25% of the remaining start-up costs.
o If the Funds (excluding Class T shares) collectively achieve an average
asset balance of less than $350 M for year one (12/4/94-12/3/95), TSSG
will forgive a pro rata portion of the year one maximum forgiveness.
o The Funds will have a one-time option, exercisable by December 15,
1995, to split the remaining start-up costs evenly with TSSG. Payment
must be made in full by December 29, 1995.
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o In the event the Funds elect not to exercise the one-time option, the
remaining start-up costs will be amortized equally over the next three
years. Reimbursement will be forgiven on each anniversary date of
conversion, if the Funds collectively achieve the following average
asset balances for the prior year (excluding Class T asset balances):
December 4, 1996 500m
December 4, 1997 750m
December 4, 1998 1,000m
The forgiveness in any year will not exceed 25% of the remaining start-up costs.
In any year that target asset levels are not achieved, a pro rata portion of the
maximum forgiveness will be applied.
An example of the reconciliation is attached as part of this Schedule B Fee
Schedule.
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RECONCILIATION EXAMPLE
NORTHSTAR START-UP COSTS
Conversion Cost $203,500
Conversion Payment 49,500
--------
Total $253,000
Fund Accounting Credit ($75,000) Converted by 12/4/95
*2.5 BP (First Year) ($60,500) (Estimated Flat Assets)
*2.0 BP (First Year) ($48,400) (Estimated Flat Assets)
---------
$69,100 Remaining
* To be recalculated based on actual revenue/assets on 12/4/95.
ASSUMPTIONS EXAMPLE 1
- - Assume balance remaining of $60,000 as of 12/4/95.
- - Assume Average Assets in Year One exceed $350M.
- - TSSG would forgive 25% of start-up costs ($15,000) per original Agreement.
- - Leaving balance of $45,000, which Northstar could either:
1. Pay 1/2 ($22,400) prior to 12/29/95 as payment in full, or
2. Defer remainder of reimbursement based on future year asset
targets.
EXAMPLE 1
Remaining Balance $60,000
Average Assets Year One >$350M
Forgiveness ($15,000)
Balance Due $45,000
One-time Split Option $22,500
Note: Actual reimbursement will be based on actual results from 12/4/94 through
12/3/95.
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ASSUMPTIONS EXAMPLE 2
- - Assume balance remaining of $60,000 as of 12/4/95.
- - Assume Average Assets in Year One do not exceed $350M target.
- - Assume aggregate assets are $325M.
- - TSSG would forgive 92.8% of 1/4 of start-up costs.
- - Leaving balance of $46,080, which Northstar could either:
1. Pay 1/2 ($23,040) prior to 12/29/95 as payment in full, or
2. Pay difference between Year One maximum forgiveness and pro
rata forgiveness based on asset levels achieved. Then defer
remainder of reimbursement based on future year asset level
targets.
EXAMPLE 1
Remaining Balance $60,000
Average Assets Year One $325M (<$350)
Year One Forgiveness ($13,920) (92.8% of $15,000)
Balance Due $46,080
One-time Split Option $23,040
or
Year One Payment $1,080 (15,000 - 13,920)
Note: Actual reimbursement will be based on actual results from 12/4/94 through
12/3/95.
23
<PAGE>
SCHEDULE C
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass though to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
- Third party audit reviews
- All conversion costs: including System start up costs
- All Systems enhancements after the conversion at the rate of $95.00
per hour
- Insurance
- Such other miscellaneous expenses reasonably incurred
by the Transfer Agent in performing its duties an
responsibilities under this Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agree with the Transfer Agent. In addition, the
Fund will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Fund and the Transfer Agent
mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
24
<PAGE>
SCHEDULE D
FUND DOCUMENTS
- Certified copy of the Articles of Incorporation of the Fund,
as amended
- Certified copy of the By-laws of the Fund, as amended
- Copy of the resolution of the Board of Directors authorizing
the execution and delivery of this Agreement
- Specimens of the certificates for Shares of the Fund, if
applicable, in the form approved by the Board of Directors of
the Fund, with a certificate of the Secretary of the Fund as
to such approval
- All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service
offered by the Fund
- Certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each
Shareholder, and the number of Shares of the Fund held by
each, certificate numbers and denominations (if any
certificates have been issued), lists of any accounts against
which stop transfer orders have been placed, together with the
reasons therefore, and the number of Shares redeemed by the
Fund
- All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation
or By-laws of the Fund or as required by law and shall perform
such other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
25
<PAGE>
<PAGE>
LAW OFFICES OF
DECHERT PRICE & RHOADS
1500 K STREET, N.W.
WASHINGTON, DC 20005-1208
TELEPHONE: (202) 626-3300
FAX: (202) 626-3334
Exhibit 10
February 28, 1997
Northstar Trust
Two Pickwick Plaza
Greenwich, Connecticut 06830
Ladies and Gentlemen:
As counsel to the Northstar Trust (the "Fund"), we are familiar
with the Fund's registration under the Investment Company Act of 1940 and
with the registration statement relating to its shares of beneficial interest
under the Securities Act of 1933 (File No. 33-67852) (the "Registration
Statement"). We have also examined such other corporate records, agreements,
documents and instruments as we deemed appropriate.
On the basis of the foregoing, we are of the opinion that the shares of
beneficial interest of the Fund being registered under the Securities Act
of 1933 in the Registration Statement will be legally and validly issued,
fully paid and non-assessable by the Fund.
We hereby consent to the filing of this opinion with and as part of the
Registration Statement.
Very truly yours,
/s/ Dechert Price & Rhoads
<PAGE>
Coopers Coopers & Lybrand, L.L.P.
& Lybrand
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------------------
We consent to the incorporation by reference in this Post-Effective
Amendment No. 14 to the Registration Statement of Northstar Trust
on Form N-1A (File No. 33-67852) of our reports dated
December 6, 1996 and January 31, 1997, on our audits of the financial
statements and financial highlights of Northstar Trust and Northstar Funds,
respectively, which reports are included in the Annual Report to Shareholders
for the years ended October 31, 1996 and December 31, 1996, which are also
incorporated by reference in this Post-Effective Amendment to the Registration
Statement.
We also consent to the reference to our firm under the caption "Financial
Highlights" in the Prospectus and under the captions "Other Information"
and "Financial Statements" in the Statement of Additional Information.
(Signature of Coopers & Lybrand L.L.P.)
Coopers & Lybrand L.L.P.
New York, New York
February 28, 1997
Coopers & Lybrand L.L.P., a registered limited liability partnership,
is a member firm of Coopers & Lybrand (International).
<PAGE>
(Northstar Trust Logo appears here and wording read as follows)
NORTHSTAR
TRUST
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 1996
(Graphics picture of Northstar brochure appears here)
<PAGE>
NORTHSTAR TRUST
ANNUAL REPORT,
October 31, 1996
(Northstar logo appears here)
Dear Shareholders:
We are pleased to provide you with the annual report of the Northstar Trust for
the year ended October 31, 1996. We are gratified with your decision to entrust
your assets to the Northstar Funds and are confident that we can assist you in
reaching your financial objectives. Our goal is to provide you with long term,
consistent, and superior investment results through fundamental research,
analysis, and traditional investment disciplines. Following this letter is a
summary of the results of each Fund by their respective portfolio manager. We
hope you will find it informative.
During the past twelve months the U.S. financial markets have been strongly
supported by moderate growth in the economy, higher corporate profits, and
subdued inflation. Concerns that a slowdown late in 1995 would turn into a
recession in 1996 were dispelled as spending for housing and autos remained
strong bolstered by favorable interest rates, mortgage refinancing, consumer
credit, and tax refunds. The stock market began to reflect this in February,
rising sharply and broadening out to include small capitalization stocks, not
just the short list of blue chips that dominated late 1995 and early 1996.
Likewise, the high yield bond market benefited from narrowing yield spreads over
U.S. Treasuries and rising confidence resulting in excellent relative
performance. A mid-year correction occurred, brought on by strong second quarter
growth igniting fears of inflation and profit margin pressure. It proved short
lived as the third quarter returned to a slower growth path with subdued
inflation.
Now in November, the S&P 500 is at a record high and long term government bonds
yield about 6.5%. The strength in equities is again centered on blue chips.
Looking into 1997 the investment environment continues to be favorable. There
does not appear to be the type of excesses present which would necessitate
either a recession or an overheated inflation condition. The political situation
suggests further progress on the federal deficit, restrained spending, and
possibly some tax cuts. Personal incomes are rising and consumer sentiment is
favorable. U.S. trading partners are expected to see faster growth in 1997.
Monetary policy is neutral and could be eased if necessary.
We note with great conviction that attempts to "time" the market often prove
counterproductive. Investors are strongly urged to focus on the long term.
Consistent disciplined investing is the proven method of achieving attractive
returns and meeting your financial objectives. We continue to support this
philosophy and look forward to serving your investment needs in the future.
Sincerely,
(Signature of Mark L. Lipson
appears here)
Mark L. Lipson
President
December 6, 1996
<PAGE>
(This page has been left blank intentionally)
<PAGE>
(Photo of John W. Fisher (Photo of Margaret D. Patel
appears here) appears here)
JOHN W. FISHER MARGARET D. PATEL
(Northstar logo appears here)
NORTHSTAR
INCOME AND GROWTH FUND
THE MARKETS
(Bullet) In the twelve months ended October 31, 1996, the backdrop for
financial markets remained favorable. The economy continued to grow
at around a 3% annual rate, interest rates increased only slightly,
and corporate profits advanced moderately.
(Bullet) The equity market indexes reflected these positive trends, and
staged strong broad-based advances. The Dow Jones Industrial Index
was up 26.8%; the S&P, up 21.3%; and the NASDAQ, an increase of
17.9%.
(Bullet) The economy should continue to advance over the balance of 1996 and
into 1997 as business conditions remain healthy, unemployment rates
are historically low, and interest rates recede from their yearly
highs in the summer. With the consumer debt burden historically
high; however, gains based on strong consumer spending may become
muted.
THE FUND
(Bullet) The Fund's Class A shares had a total rate of return of 14.5% for
the twelve months ended October 31, 1996. This performance may be
compared to the average Lipper Balance Fund gain of 14.0%. The
Fund's increase in share price was due primarily to the performance
of its equity holdings, comprising approximately 54% to 57% of
total assets in the period. In addition, the Funds fixed income
holdings included many convertible issues, which provided above
average yield, along with some capital appreciation as their
underlying equities rose in price.
(Bullet) Equity gains were lead by the Fund's holding of very high quality
large capitalization, dividend paying common stocks, which
benefited as investors moved to more conservative stocks over the
year. Energy, financial, telecommunications, and industrial
holdings contributed strong performance to the Fund.
CURRENT STRATEGY
(Bullet) We expect the major stock market indices may register further gains
over the near term, but believe market results may not be evenly
spread among industries. Individual stock selection based on
specific company fundamentals ought to prove important to achieving
performance goals. We continue to favor energy, industrial, and
financial stocks which we believe are positioned to do well in a
climate of moderate economic growth.
FUND INFORMATION (ALL DATA ARE AS OF 10/31/96)
TOP 10 HOLDINGS
NAME % FUND
1 GNMA 6.50% 7.3%
2 General Electric Co. 4.3%
3 3M 4.2%
4 Eastman Kodak Co. 3.9%
5 Philip Morris Co. 3.4%
6 J.P. Morgan 3.1%
7 Merrill Lynch Co.
("Cox Comm.") Cv. Pfd. 2.7%
8 du Pont 2.6%
Occidental Petr. Cv
9 Pfd. 2.3%
10 SFX Broad. Cv Pfd. 2.2%
36.0%
TOP 5 INDUSTRIES
(by percentage of net asset)
U.S. Government &
Agencies 10.9%
Oil & Gas 8.9%
Energy 8.3%
Banking 7.5%
Electrical &
Electronic Equip. 6.2%
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales
charge)
Inception 1 year
Class A 8.04% 9.08%
Class B 6.52% 8.60%
Class C 8.90% 12.68%
CUMULATIVE TOTAL RETURNS
(do not reflect sales charge)
Inception 1 year
Class A 32.20% 14.48%
Class B 21.80% 13.60%
Class C 25.03% 13.68%
1
<PAGE>
NORTHSTAR
INCOME AND GROWTH FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
NORTHSTAR INCOME AND GROWTH FUND AND COMPARATIVE INDICES FROM
INCEPTION OF EACH CLASS OF SHARES THROUGH THE FUND'S FISCAL
YEAR END.
In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data is supplied for the fiscal year ended October 31,
1996, with all distributions reinvested in shares. The average annualized total
return for Class A shares of 8.04% for the period since the Fund's inception of
November 8, 1993 reflects payment of the maximum sales charge of 4.75%. Average
annualized total returns of 6.52% and 8.90% since inception for Class B and
Class C shares of February 9, 1994 and March 21, 1994, respectively, reflect
applicable contingent deferred sales charges (maximum contingent deferred sales
charge for Class B shares of 5.00% declines to 0% after five years; and maximum
charge for Class C shares is 1.00% during the first year of investment only).
All performance data shown represents past performance, and should not be
considered indicative of future performance.
(Chart of Northstar Income and Growth Fund--Class A
and its plotting points are as follows:)
(Chart of Northstar Income and Growth Fund--Class B
and its plotting points are as follows:)
(Chart of Northstar Income and Growth Fund--Class C
and its plotting points are as follows:)
2
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Industry $ Value % of Fund Portfolio
<S> <C> <C> <C>
Aerospace $ 7,504,125 3.46 %
Automotive 8,220,188 3.79
Banking 16,269,238 7.50
Broadcasting 7,129,560 3.29
Chemicals 10,146,250 4.68
Communications 5,812,500 2.68
Computers 2,854,860 1.31
Consumer Products 13,250,304 6.11
Data Management 1,200,000 0.55
Electrical & Electronic Equipment 13,523,995 6.24
Energy 17,880,242 8.25
Healthcare/Pharmaceuticals 9,969,220 4.60
Hotels 3,055,883 1.41
Insurance 1,419,990 0.65
Marine 2,787,750 1.29
Oil & Gas 19,385,768 8.94
Paper & Forest Products 3,284,375 1.51
Photography 8,373,750 3.86
Real Estate Investment Trust 972,928 0.45
Retail 6,456,875 2.98
Scientific 496,560 0.23
Security 3,658,886 1.69
Telecommunications 4,185,000 1.93
Tobacco 9,431,250 4.35
Transportation 5,044,031 2.33
U.S. Government & Agencies 23,572,977 10.87
Waste Management 1,687,000 0.78
Repurchase Agreements 13,386,270 6.17
Liabilities in excess of other assets (4,128,973) (1.90)
Net Assets $216,830,802 100.00 %
</TABLE>
PROXY RESULTS (UNAUDITED)
During the year ended October 31, 1996, Income and Growth Fund shareholders
voted on the following proposal. The proposal was approved at a special meeting
of shareholders on July 15, 1996.
<TABLE>
<CAPTION>
Shares Shares
Voted Voted
For Against Abstentions
<S> <C> <C> <C>
To approve the Sub-Advisory agreement between Northstar
Investment Management Corp., adviser to the Fund, and
Wilson/Bennett Capital Management, Inc. 10,153,158 1,150,883 469,234
</TABLE>
3
<PAGE>
(Photo of Thomas Ole Dial
appears here)
THOMAS OLE DIAL
NORTHSTAR
HIGH TOTAL RETURN FUND
THE MARKETS
(Bullet) It is widely agreed that the Federal Reserve's interest rate
policies helped the U.S. economy maintain an ideal blend of
moderate growth and inflation in the last 12 months, although there
were fears of both inflation and recession along the way. Despite
gyrating between 5.9% and 7.2%, the yield on the long bond ended at
6.6%, after starting at 6.3%. Meanwhile, irregular but sustained
growth in the U.S. economy and in corporate profits sent stock
prices to record levels throughout 1996, with all the major
averages returning 18.0% or more.
(Bullet) Prices of domestic and foreign high yield bonds rose much more than
those of investment grade and government bonds in the last 12
months. Higher rated bond prices were buffeted by inflation fears
that affected higher coupon issues to a lesser extent. Since
domestic high yield bond prices are influenced by the amount of
equity below them, those bonds were further boosted by higher stock
valuations.
THE FUND
(Bullet) For the twelve month period ending October 31, 1996, the total
return of the Fund's Class A shares was 18.1%; the Lipper Fixed
Income Fund average was 11.6%. The Fund's superior performance
promoted sales that led to a 290% increase in its net assets, which
rose from $196 million to $569 million.
(Bullet) The Fund's performance was enhanced by changes in portfolio
allocations that anticipated changes in the markets. We
underweighted investments in the retail, gaming, and cyclical
industries (e.g., steel, chemicals, and paper). However, we earned
high returns on increased investments in the telecommunications,
alternative energy, healthcare, cable, and broadcasting industries
and in emerging markets sovereign and corporate bonds.
(Bullet) Bonds that were issued with equity securities or rights attached
("equity kickers") contributed significantly to the Fund's high
returns (e.g., American Comm., Echostar, Geotek, Heartland Wireless
and Source Media).
CURRENT STRATEGY
(Bullet) Continue above-average exposure in non-cyclical industries and in
bonds that have equity kickers.
(Bullet) As the opportunities to take advantage of trends in sectors
decline, we will increase our focus on spreads among individual
securities with different risk profiles/ratings and invest in
securities with the best relative values.
FUND INFORMATION (ALL DATA ARE AS OF 10/31/96)
TOP 10 HOLDINGS
NAME % FUND
1 Heartland Wireless 2.0%
2 First Nationwide 1.9%
3 Multicanal Particip. 1.9%
4 Paging Network 1.9%
5 CalEnergy 1.8%
6 Central Rents 1.8%
7 Clark USA 1.8%
Lenfest
8 Communication 1.8%
9 Rogers Cablesystems 1.8%
10 Trump Atlantic City 1.8%
18.5%
TOP 5 INDUSTRIES
(by percentage of net assets)
Telecommunication 20.8%
Cable 11.3%
Misc. Services 6.8%
Broadcasting/Cable 6.1%
Oil & Gas 5.0%
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales
charge)
Inception 1 year
Class A 7.25% 12.62%
Class B 5.66% 12.08%
Class C 7.82% 16.28%
CUMULATIVE TOTAL RETURNS
(do not reflect sales charge)
Inception 1 year
Class A 29.35% 18.14%
Class B 18.98% 17.08%
Class C 21.81% 17.28%
4
<PAGE>
NORTHSTAR
HIGH TOTAL RETURN FUND
(Northstar logo appears here)
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
NORTHSTAR HIGH TOTAL RETURN FUND AND COMPARATIVE INDICES FROM
INCEPTION OF EACH CLASS OF SHARES THROUGH THE FUND'S FISCAL
YEAR END.
In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data is supplied for the fiscal year ended October 31,
1996, with all distributions reinvested in shares. The average annualized total
return for Class A shares of 7.25% for the period since the Fund's inception of
November 8, 1993 reflects payment of the maximum sales charge of 4.75%. Average
annualized total returns of 5.66% and 7.82% since inception for Class B and
Class C shares of February 9, 1994 and March 21, 1994, respectively, reflect
applicable contingent deferred sales charges (maximum contingent deferred sales
charge for Class B shares of 5.00% declines to 0% after five years; and maximum
charge for Class C shares is 1.00% during the first year of investment only).
All performance data shown represents past performance, and should not be
considered indicative of future performance.
(Chart of Northstar High Total Return Fund--Class A
and its plotting points are as follows:)
(Chart of Northstar High Total Return Fund--Class B
and its plotting points are as follows:)
(Chart of Northstar High Total Return Fund--Class C
and its plotting points are as follows:)
5
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
COMMON STOCKS -- 55.86%
AEROSPACE -- 3.46%
AlliedSignal, Inc. 32,000 $ 2,096,000
Boeing Co. 32,000 3,052,000
United Technologies Corp. 18,300 2,356,125
7,504,125
AUTOMOTIVE -- 3.79%
Chrysler Corp. 86,000 2,891,750
Ford Motor Co. 80,000 2,500,000
General Motors Corp. 52,500 2,828,438
8,220,188
BANKING -- 7.50%
Bankers Trust N.Y. Corp. 45,000 3,802,500
Citicorp 23,800 2,356,200
J. P. Morgan & Co., Inc. 78,200 6,754,525
Mellon Bank Corp. 29,100 1,895,138
NationsBank Corp. 15,500 1,460,875
16,269,238
CHEMICALS -- 4.68%
Dow Chemical Co. 25,000 1,943,750
du Pont (E. I.) De Nemours & Co. 60,000 5,565,000
Eastman Chemical Co. 50,000 2,637,500
10,146,250
COMPUTERS -- 0.84%
Lucent Technologies, Inc. 38,890 1,827,830
CONSUMER PRODUCTS -- 6.11%
Imation Corp. @ 8,000 219,000
Kimberly-Clark Corp. 41,140 3,836,304
Minnesota, Mining & Manufacturing Co. 120,000 9,195,000
13,250,304
ELECTRICAL & ELECTRONIC EQUIPMENT -- 4.29%
General Electric Co. 96,100 9,297,675
HEALTHCARE/PHARMACEUTICALS -- 3.15%
Bristol-Myers, Squibb Co. 33,000 3,489,750
Merck & Co., Inc. 45,000 3,335,625
6,825,375
</TABLE>
6
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
OIL & GAS -- 8.94%
Amoco Corp. 36,190 $ 2,741,393
Chevron Corp. 70,000 4,602,500
Exxon Corp. 52,500 4,652,812
Mobil Corp. 35,000 4,086,250
Texaco, Inc. 32,500 3,302,813
19,385,768
PAPER & FOREST PRODUCTS -- 1.51%
International Paper Co. 50,000 2,137,500
Weyerhaeuser Co. 25,000 1,146,875
3,284,375
PHOTOGRAPHY -- 3.86%
Eastman Kodak Co. 105,000 8,373,750
RETAIL -- 1.45%
Sears, Roebuck & Co. 65,000 3,144,375
TELECOMMUNICATIONS -- 1.93%
A T & T Corp. 120,000 4,185,000
TOBACCO -- 4.35%
Philip Morris Cos., Inc. 80,000 7,410,000
RJR Nabisco Holdings Corp. 70,000 2,021,250
9,431,250
TOTAL COMMON STOCKS
(cost $106,682,215) 121,145,503
CONVERTIBLE PREFERRED STOCKS -- 13.90%
BROADCASTING -- 3.29%
Cablevision Systems Corp., 8.50% 115,000 2,343,125
SFX Broadcasting, Inc., 6.50% 85,000 4,786,435
7,129,560
COMMUNICATIONS -- 2.68%
Merrill Lynch Co., ("Cox Communications") 6.00% due 6/01/99 (1) 300,000 5,812,500
ELECTRICAL & ELECTRONIC EQUIPMENT -- 0.89%
Westinghouse Electric Corp., $1.30 # 120,000 1,936,920
ENERGY -- 5.51%
Enron Corp., 6.25% (2) 78,000 1,911,000
MCN Corp., 8.75% (3) 82,500 2,268,750
Noram Financing, 6.25% 43,000 2,741,250
Occidental Petroleum Corp., $3.875 # 85,500 5,019,192
11,940,192
RETAIL -- 1.53%
Tyco Toys, Inc., $0.4125 500,000 3,312,500
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $30,386,716) 30,131,672
</TABLE>
7
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
Security Shares/Principal Amount Value
<S> <C> <C>
EXCHANGEABLE NOTES -- 0.86%
ENERGY -- 0.86%
Atlantic Richfield Corp.
9.00%, Exchangeable Notes, 9/15/97 (4) 86,000 $ 1,859,750
TOTAL EXCHANGEABLE NOTES
(cost $2,383,202) 1,859,750
CONVERTIBLE BONDS -- 11.77%
COMPUTERS -- 0.47%
Apple Computer, Inc.
6.00%, Subordinated Notes, 6/01/01 # $1,000,000 1,027,030
DATA MANAGEMENT -- 0.55%
National Data Corp.
5.00%, Subordinated Notes, 11/01/03 1,200,000 1,200,000
ELECTRICAL & ELECTRONIC EQUIPMENT -- 1.06%
Richey Electronics, Inc.
7.00%, Subordinated Notes, 3/01/06 # 1,220,000 1,091,900
S3, Inc.
5.75%, Subordinated Notes, 10/01/03 # 1,000,000 1,197,500
2,289,400
ENERGY -- 1.88%
Pogo Producing Co.
5.50%, Subordinated Notes, 6/15/06 # 3,350,000 4,080,300
HEALTHCARE/PHARMACEUTICALS -- 1.45%
Healthsource, Inc.
5.00%, Sr. Notes, 3/01/03 # 1,700,000 1,356,056
Sierra Health Services, Inc.
7.50%, Debentures, 9/15/01 1,920,000 1,787,789
3,143,845
HOTELS -- 1.41%
Hilton Hotels Corp.
5.00%, Subordinated Notes, 5/10/06 2,750,000 3,055,883
MARINE -- 1.29%
Seacor Holdings, Inc.
5.375%, Subordinated Notes, 11/15/06 2,700,000 2,787,750
REAL ESTATE INVESTMENT TRUST -- 0.45%
Meditrust
7.50%, Debentures, 3/01/01 940,000 972,928
</TABLE>
8
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
SCIENTIFIC -- 0.23%
Thermo Instrument Systems, Inc.
4.50%, Debentures, 10/15/03 # $ 500,000 $ 496,560
SECURITY -- 1.69%
Protection One, Inc.
6.75%, Sr. Subordinated Notes, 9/15/03 3,850,000 3,658,886
TRANSPORTATION -- 0.51%
Alaska Air Group, Inc.
6.50%, Sr. Unsecured Debentures, 6/15/05 975,000 1,112,719
WASTE MANAGEMENT -- 0.78%
United Waste Systems, Inc.
4.50%, Subordinated Notes, 6/01/01 1,400,000 1,687,000
TOTAL CONVERTIBLE BONDS
(cost $24,166,342) 25,512,301
CORPORATE BONDS & NOTES -- 2.47%
INSURANCE -- 0.66%
Leucadia National Corp.
8.25%, Sr. Subordinated Notes, 6/15/05 1,375,000 1,419,990
TRANSPORTATION -- 1.81%
Continental Airlines, Inc.
7.82%, Pass-Thru Certificates, 4/15/15 3,850,000 3,931,312
TOTAL CORPORATE BONDS & NOTES
(cost $5,289,433) 5,351,302
U.S. GOVERNMENT & AGENCIES -- 10.87%
Government National Mortgage Association
6.50%, 10/15/23 2,603,002 2,507,810
6.50%, 2/15/26 22,011,189 21,065,167
TOTAL U.S. GOVERNMENT & AGENCIES
(cost $24,472,363) 23,572,977
TOTAL INVESTMENT SECURITIES -- 95.73%
(cost $193,380,271) 207,573,505
REPURCHASE AGREEMENT -- 6.17%
Agreement with Bear Stearns bearing interest at 5.47% dated
10/31/96, to be repurchased 11/01/96 in the amount of
$13,388,304 and collateralized by $2,150,000 U.S. Treasury
Notes, 7.50% due 11/15/01, $2,301,000 U.S. Treasury Notes, 6.25%
due 2/15/03, $3,605,000 U.S. Treasury Notes, 6.50% due 5/15/05, X
$1,700,000 U.S. Treasury STRIPS, due 8/15/08, and $3,849,000
U.S. Treasury Bonds, 7.875% due 02/15/21, value $13,655,515
(cost $13,386,270) 13,386,270 13,386,270
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.90)% (4,128,973)
NET ASSETS -- 100.00% $216,830,802
</TABLE>
@ Non-income producing.
# Sales restricted to qualified institutional investors.
(1) STRYPES -- Structured Yield Product Exchangeable For Stock.
(2) Mandatory conversion on 12/13/98 into shares of Enron Oil & Gas common
stock.
(3) PRIDES -- Preferred Redeemable Increased Dividend Equity Securities.
(4) Mandatory conversion on 9/15/97 into shares of Lyondell Petrochemical Co.
common stock.
See accompanying notes to financial statements.
9
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
CORPORATE BONDS & NOTES -- 78.46%
DOMESTIC CORPORATE BONDS & NOTES -- 57.51%
AEROSPACE/DEFENSE -- 0.75%
Simula, Inc.
10.00%, Sr. Subordinated Notes, 9/15/99 $4,250,000 $ 4,271,250
BROADCASTING/CABLE -- 2.41%
Commodore Media, Inc.
7.50/13.25%, Sr. Subordinated Notes, 5/01/03 $ 5,715,000 5,943,600
SFX Broadcasting, Inc.
10.75%, Sr. Subordinated Notes, 5/15/06 7,500,000 7,762,500
13,706,100
CABLE -- 6.89%
CAI Wireless Systems, Inc.
12.25%, Sr. Notes, 9/12/02 9,000,000 8,685,000
CS Wireless Systems, Inc.
0/11.375%, Units, 3/01/06 # $ (1) 3,000 5,580,000
Heartland Wireless Communications, Inc.
13.00%, Sr. Notes, 4/15/03 10,333,000 11,133,807
Lenfest Communications, Inc.
10.50%, Sr. Subordinated Notes, 6/15/06 10,000,000 10,075,000
UIH Australia/Pacific, Inc.
0/14.00%, Sr. Discount Notes, 5/15/06 $ 7,000,000 3,710,000
39,183,807
CONSUMER PRODUCTS -- 1.61%
International Semi-Tech Corp.
0/11.50%, Sr. Secured Discount Notes, 8/15/03 $ 5,900,000 3,672,750
Source Media, Inc.
13.00%, Sr. Secured Notes, 3/31/01 (2)(3) 5,326,805 5,486,609
9,159,359
ENTERTAINMENT -- 0.86%
Cinemark U.S.A., Inc.
9.625%, Sr. Subordinated Notes, 8/01/08 # 5,000,000 4,900,000
FINANCE -- 4.50%
Central Rents, Inc.
12.875%, Sr. Notes, 12/15/03 10,050,000 10,301,250
First Nationwide Bank, FSB
10.625%, Sr. Subordinated Notes, 10/01/03 # 10,000,000 10,525,000
Ocwen Financial Corp.
11.875%, Notes, 10/01/03 4,500,000 4,781,250
25,607,500
FOOD -- 0.44%
International Home Foods, Inc.
10.375%, Sr. Subordinated Notes, 11/01/06 # 2,450,000 2,480,625
GROCERY -- 1.32%
Dairy Mart Convenience Stores, Inc.
10.25%, Sr. Subordinated Notes, 3/15/04 7,795,000 7,522,175
</TABLE>
10
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
HEALTHCARE -- 1.34%
Intracel Corp.
8.00/11.00%, Sr. Notes, 12/31/00 $ (2) $6,648,468 $ 5,609,645
Intracel Corp.
12.00%, Sr. Notes, 6/01/03 2,000,000 2,010,000
7,619,645
HOTELS & GAMING -- 2.44%
Courtyard By Marriott II L.P.
10.75%, Sr. Secured Notes, 2/01/08 3,000,000 3,131,250
Sam Houston Race Park Ltd.
11.75%, Sr. Notes, 7/15/99 & 841,457 340,790
Trump Atlantic City Funding, Inc.
11.25%, 1st Mortgage Notes, 5/01/06 10,900,000 10,409,500
13,881,540
INSURANCE -- 1.03%
Americo Life, Inc.
9.25%, Sr. Subordinated Notes, 6/01/05 6,000,000 5,880,000
METALS & MINING -- 0.62%
Kaiser Aluminum & Chemical Corp.
10.875%, Sr. Notes, 10/15/06 # 3,500,000 3,513,125
MISCELLANEOUS SERVICES -- 5.72%
Anacomp, Inc.
13.00%, Sr. Subordinated Notes, 6/04/02 & 7,000,000 7,402,500
Coinstar, Inc.
0/13.00%, Units, 10/01/06 # $ (4) 8,700 6,090,000
ICF Kaiser International, Inc.
13.00%, Units, 12/31/03 (5) 9,254 9,161,460
La Petite Holdings Corp.
9.625%, Sr. Secured Notes, 8/01/01 4,800,000 4,776,000
Real Time Data
0/13.50%, Units, 8/15/06 # $ (6) 9,450 5,150,250
32,580,210
OIL & GAS -- 4.96%
Clark U.S.A., Inc.
10.875%, Sr. Notes, 12/01/05 10,000,000 10,375,000
Crown Central Petroleum Corp.
10.875%, Sr. Notes, 2/01/05 8,500,000 8,670,000
TransAmerican Refining Corp.
0/18.00%, 1st Mortgage Discount Notes, 2/15/02 $ 3,000,000 2,385,000
TransAmerican Refining Corp.
16.50/16.00%, 1st Mortgage Notes, 2/15/02 $ 6,900,000 6,796,500
28,226,500
REAL ESTATE -- 2.09%
K-Mart Funding Corp.
8.80%, Secured Lease Bonds, 7/01/10 5,000,000 4,403,150
Lehman ABS Corp.
8.145%, Pass-Through, 11/02/07 8,840,490 7,470,214
11,873,364
</TABLE>
11
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
RETAIL -- 0.03%
Wherehouse Entertainment, Inc.
13.00%, Sr. Subordinated Notes, 8/01/02 * $3,000,000 $ 150,000
STEEL -- 1.25%
Bar Technologies Ltd.
13.50%, Company Guarantee, 4/01/01 7,000,000 7,105,000
TELECOMMUNICATIONS -- 13.72%
American Communications Services, Inc.
0/13.00%, Sr. Discount Notes, 11/01/05 $ 10,500,000 5,906,250
Dial Call Communications, Inc.
0/12.25%, Sr. Discount Notes, 4/15/04 $ 12,500,000 8,468,750
Geotek Communications, Inc.
0/15.00%, Sr. Discount Notes, 7/15/05 $ 10,900,000 6,976,000
GST USA, Inc.
0/13.875%, Sr. Discount Notes, 12/15/05 $ 5,975,000 3,346,000
Hyperion Telecommunications, Inc.
0/13.00%, Sr. Discount Notes, 4/15/03 $ 10,200,000 5,992,500
ICG Holdings, Inc.
0/13.50%, Sr. Discount Notes, 9/15/05 $ 7,000,000 4,637,500
International Wireless Communication, Inc.
0%, Units, 8/15/01 # (7) 6,000 3,300,000
Nextlink Communications, Inc.
12.50%, Sr. Notes, 4/15/06 6,000,000 6,165,000
Pagemart Nationwide, Inc.
0/15.00%, Sr. Discount Notes, 2/01/05 $ 5,850,000 4,021,875
Paging Network, Inc.
10.00%, Sr. Subordinated Notes, 10/15/08 # 10,900,000 10,845,500
Sygnet Wireless, Inc.
11.50%, Sr. Notes, 10/01/06 5,000,000 5,025,000
Telcom Technologies, Inc.
12.00%, Sr. Notes, 1/31/00 (2) 1,844,236 1,853,457
Western Wireless Corp.
10.50%, Sr. Subordinated Notes, 2/01/07 # 3,000,000 3,015,000
WinStar Communications, Inc.
0/14.00%, Sr. Discount Notes, 10/15/05 $ 15,000,000 8,550,000
78,102,832
TRANSPORTATION -- 2.02%
Ameritruck Distribution Corp.
12.25%, Sr. Subordinated Notes, 11/15/05 2,000,000 1,990,000
Burlington Motor Holdings, Inc.
11.50%, Sr. Subordinated Notes, 11/01/03 * 4,950,000 49,500
Great Dane Holdings, Inc.
0/14.50%, Subordinated Debentures, 1/01/06 $ 6,250,000 6,218,750
Great Dane Holdings, Inc.
12.75%, Sr. Subordinated Debentures, 8/01/01 3,250,000 3,217,500
11,475,750
</TABLE>
12
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
UTILITY -- 3.51%
CalEnergy Co., Inc.
9.50%, Sr. Notes, 9/15/06 # $10,000,000 $ 10,250,000
CE Casecnan Water & Energy, Co.
11.95%, Sr. Secured Notes, 11/15/10 # 8,800,000 9,702,000
19,952,000
TOTAL DOMESTIC CORPORATE BONDS & NOTES 327,190,782
FOREIGN BONDS & NOTES -- 18.60%
CABLE -- 3.18%
Austrialis Media Ltd.
0/14.00%, Units, 5/15/03 $ (8) 2,000 1,160,000
Multicanal Participacoes
12.625%, Sr. Notes, 6/18/04 2,000,000 2,140,000
Multicanal Participacoes
12.625%, Sr. Notes, 6/18/04 # 9,875,000 10,566,250
Net Sat Servicos Ltda
12.75%, Sr. Secured Notes, 8/05/04 # 4,000,000 4,250,000
18,116,250
CONGLOMERATE/MANUFACTURING -- 0.95%
Cemex SA
12.75%, Guarantee Notes, 7/15/06 # 5,000,000 5,406,250
FOREIGN GOVERNMENT -- 3.22%
Federal Republic of Brazil Capitalization Bonds
8.00%, Government Guarantee, 4/15/14 (9) 11,013,700 7,599,453
Petroleos Mexicanos
7.75%, Company Guarantee, 10/29/99 # 5,000,000 4,943,750
Republic of Venezuela
6.75%, Debentures, 12/18/07 (10) 7,000,000 5,775,000
18,318,203
METALS & MINING -- 0.37%
Royal Oak Mines, Inc.
11.00%, Sr. Subordinated Notes, 8/15/06 # 2,000,000 2,085,000
PAPER -- 3.41%
APP International Finance Co.
11.75%, Guaranteed Secured Notes, 10/01/05 5,800,000 6,032,000
Grupo Industrial Durango
12.00%, Notes, 7/15/01 8,250,000 8,507,813
Indah Kiat International Finance
12.50%, Secured Company Guarantee, 6/15/06 2,500,000 2,700,000
Mallette, Inc.
12.25%, Sr. Secured Notes, 7/15/04 2,000,000 2,180,000
19,419,813
</TABLE>
13
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
TELECOMMUNICATIONS -- 4.63%
Clearnet Communications, Inc.
0/14.75%, Sr. Discount Notes, 12/15/05 $ $11,600,000 $ 7,076,000
Occidente Y Caribe Celular SA
0/14.00%, Units, 3/15/04 # $ (11) 18,385 9,238,463
Rogers Cablesystem of America
10.125%, Sr. Debentures, 9/01/12 10,000,000 10,050,000
26,364,463
TRANSPORTATION -- 0.90%
Sea Containers Ltd.
10.50%, Sr. Notes, 7/01/03 5,000,000 5,125,000
UTILITIES -- 1.94%
Invergas SA
12.50%, Notes, 12/16/99 4,925,000 5,257,438
Petersburg Long Distance, Inc.
0/14.00%, Units, 6/01/04 # $ (12) 7,000 5,775,000
11,032,438
TOTAL FOREIGN BONDS & NOTES 105,867,417
CONVERTIBLE CORPORATE BONDS -- 2.35%
HEALTHCARE -- 0.39%
Mediq, Inc.
7.50%, Subordinated Debentures, 7/15/03 2,500,000 2,237,500
TELECOMMUNICATIONS -- 1.96%
GST Telecommunications, Inc.
0/13.875%, Sr. Subordinated Discount Notes, 12/15/05 # $ 650,000 536,250
SA Telecommunications, Inc.
10.00%, Notes, 8/15/06 # 8,500,000 8,372,500
WinStar Communications, Inc.
0/14.00%, Sr. Subordinated Discount Notes, 10/15/05 $ 3,500,000 2,248,750
11,157,500
TOTAL CONVERTIBLE CORPORATE BONDS 13,395,000
TOTAL CORPORATE BONDS AND NOTES
(cost $445,352,920) 446,453,199
</TABLE>
14
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
DOMESTIC PREFERRED STOCK -- 6.34%
BROADCASTING/CABLE -- 3.47%
Benedek Communications Corp., 15.00% # 44,000 $ 4,719,000
Chancellor Broadcasting Co., 12.25% # & 75,000 8,250,000
Paxson Communication, Corp., 12.50% & 6,750 6,766,875
19,735,875
CABLE -- 1.12%
Cablevision Systems, 11.75% & 66,067 6,358,949
COMPUTER SERVICES -- 0.10%
Telos Corp., 12.00% & 129,687 599,802
HEALTHCARE -- 0.56%
Intracel Corp., 8.00% (2) (13) 212,675 3,190,125
MISCELLANEOUS SERVICES -- 1.09%
La Petite Holdings, 12.125% 174,200 6,184,100
RETAIL -- 0.00%
Color Tile, Inc., 13.00%* @ 20,000 0
TOTAL DOMESTIC PREFERRED STOCK
(cost $34,097,896) 36,068,851
DOMESTIC COMMON STOCK -- 0.28% @
BROADCASTING -- 0.23%
EchoStar Communications Corp. 40,050 1,181,475
Pegasus Media & Communications, Inc. 440 132,000
1,313,475
HOTEL/GAMING -- 0.00%
Sam Houston Race Park Ltd. 224 1,232
PRINTING/PUBLISHING -- 0.03%
Affiliated Newspaper Investments, Inc. 2,500 150,000
RETAIL -- 0.02%
Thrifty Payless Holdings, Inc. 5,700 121,838
TOTAL DOMESTIC COMMON STOCK
(cost $101,120) 1,586,545
DOMESTIC WARRANTS -- 1.23% @
AEROSPACE -- 0.00%
Sabreliner Corp. (expires 4/15/03) 2,450 12,250
BROADCASTING/CABLE -- 0.23%
Benedek Communications Corp. (expires 7/01/07) 44,000 319,000
Spanish Broadcasting Systems, Inc. (expires 6/30/99) 5,000 962,500
1,281,500
CABLE -- 0.08%
American Telecasting, Inc. (expires 8/10/00) 4,000 60,000
Heartland Wireless Communications, Inc. (expires 4/97) 46,402 394,417
Wireless One, Inc. (expires 10/15/03) 1,500 7,500
461,917
</TABLE>
15
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
CONSUMER PRODUCTS -- 0.16%
Chattem, Inc. (expires 6/17/99) # 1,300 $ 26,325
Source Media, Inc. (expires 6/23/00) 500,000 906,000
932,325
FINANCE -- 0.08%
Central Rents, Inc. (expires 2003) 7,150 429,000
GROCERY -- 0.00%
Dairy Mart Convenience Stores, Inc. (expires 12/12/01) 23,632 23,632
HEALTHCARE -- 0.08%
Intracel Corp. (expires 12/31/00) 173,547 455,561
PAPER -- 0.07%
SD Warren Co. (expires 1/01/00) 80,000 400,000
STEEL -- 0.09%
Bar Technologies Ltd. (expires 4/01/01) 7,000 420,000
Gulf States Steel, Inc. (expires 4/15/03) 5,010 27,555
Sheffield Steel Corp. (expires 11/01/01) 12,500 40,625
488,180
TELECOMMUNICATION -- 0.44%
American Communications Services, Inc. (expires 11/01/05) 14,500 1,160,000
Cellular Communications, Inc. (expires 8/15/03) 6,250 37,500
Clearnet Communications, Inc. (expires 9/15/05) 38,280 325,380
Geotek Communications, Inc. (expires 2005) 177,000 442,500
Hyperion Telecommunications, Inc. (expires 4/15/01) 10,200 459,000
Intelcom Group, Inc. (expires 8/03/05) 6,600 102,300
Telecom Technologies, Inc. (expires 2/18/97 -- 1/31/01) 1,544,378 0
2,526,680
TRANSPORTATION -- 0.00%
CHC Helicopter Corp. (expires 12/15/00) 2,000 1,000
TOTAL DOMESTIC WARRANTS
(cost $2,483,596) 7,012,045
TOTAL INVESTMENT SECURITIES -- 86.31%
(cost $482,035,532) 491,120,640
</TABLE>
16
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
REPURCHASE AGREEMENT -- 11.45%
Agreement with Bear Stearns bearing interest at 5.47%
dated 10/31/96, to be repurchased 11/01/96 in the amount
of $65,166,978 and collateralized by $28,655,000 U.S.
Treasury STRIPS, due 2/15/05, $50,000,000 U.S. Treasury
STRIPS, due 2/15/06, $14,830,000 U.S. Treasury STRIPS, due
8/15/08, $32,175,000 U.S. Treasury STRIPS, due 11/15/08,
and $45,000 U.S. Treasury STRIPS, due 11/15/14, and
$997,800 U.S. Treasury STRIPS, due 5/15/10, value
$66,468,195 (cost $65,157,077) $65,157,077 $ 65,157,077
OTHER ASSETS LESS LIABILITIES -- 2.24% 12,721,459
NET ASSETS -- 100.00% $568,999,176
</TABLE>
# Sale restricted to qualified institutional investors.
$ Step bond.
& Payment-in-kind security.
* Bankrupt security.
@ Non-income producing security.
(1) Unit consists of $4,000 par value Sr. Discount Notes, 11.375% due 3/01/06
and 1.1 shares of common stock.
(2) Private placement.
(3) Collateralized by 5,198,065 shares Cableshare, Inc. -- Class A; 2,055,370
shares Cableshare, Inc. -- Class B; 1,000 shares Ontario, Inc. and 10
shares IT Network, Inc.
(4) Unit consists of $1,000 par value Sr. Discount Notes, 13.00% due 10/01/06
and 1 warrant.
(5) Unit consists of $1,000 par value Sr. Subordinated Notes, 13.00% due
12/31/03 and 4.8 warrants.
(6) Unit consists of $1,000 par value Sr. Discount Notes, 13.50% due 8/15/06
and 1 warrant.
(7) Unit consists of $1,000 par value Sr. Secured Discount Notes, 0% due
8/15/01 and 1 warrant.
(8) Unit consists of $1,000 par value Sr. Subordinated Discount Notes, 14.00%
due 5/15/03 and 1 warrant.
(9) Interest paid partial cash/partial capitalization.
(10) Floating Rate Bond. Rate as of October 31, 1996.
(11) Unit consists of $1,000 par value Sr. Discount Notes, 14.00% due 3/15/04
and 4 warrants.
(12) Unit consists of $1,000 par value Sr. Discount Notes, 14.00% due 6/01/04
and 1 warrant.
(13) Convertible security.
See accompanying notes to financial statements.
17
<PAGE>
NORTHSTAR TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
Northstar Northstar
Income and High Total
Growth Fund Return Fund
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $193,380,271 and $482,035,532,
respectively) $207,573,505 $491,120,640
Repurchase agreements 13,386,270 65,157,077
Receivable for investments sold 4,484,133 0
Dividends and interest receivable 719,159 8,885,392
Receivable for shares of beneficial interest sold 213,528 8,646,383
Prepaid expenses 34,437 36,655
Total Assets 226,411,032 573,846,147
LIABILITIES:
Payable for investments purchased 6,862,420 2,450,000
Payable for shares of beneficial interest reacquired 2,325,752 1,308,341
Investment advisory fee payable 138,692 332,607
Distribution fee payable 133,511 364,136
Transfer agent fee payable 33,226 91,164
Administrative services fee payable 18,492 46,284
Accounting fee payable 13,115 44,692
Registration fee payable 3,320 114,720
Accrued expenses 51,702 95,027
Total Liabilities 9,580,230 4,846,971
NET ASSETS $216,830,802 $568,999,176
NET ASSETS WERE COMPOSED OF:
Capital paid in for shares of beneficial interest, $.01 par value outstanding
(unlimited shares authorized) $180,525,710 $559,243,245
Undistributed net investment income 143,023 0
Accumulated net realized gain on investments 21,968,835 670,823
Net unrealized appreciation of investments 14,193,234 9,085,108
Net Assets $216,830,802 $568,999,176
CLASS A:
Net Assets $ 85,249,897 $167,698,067
Shares outstanding 7,011,851 35,109,861
Net asset value and redemption value per share (net assets/shares
outstanding) $ 12.16 $ 4.78
Maximum offering price per share (net asset value plus sales charge of 4.75%
of offering price) $ 12.77 $ 5.02
CLASS B:
Net Assets $ 71,123,120 $346,918,732
Shares outstanding 5,862,555 72,690,041
Net asset value and offering price per share $ 12.13 $ 4.77
CLASS C:
Net Assets $ 60,457,785 $ 54,382,377
Shares outstanding 4,988,722 11,347,248
Net asset value and offering price per share $ 12.12 $ 4.79
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
NORTHSTAR TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
(Northstar logo appears here)
<TABLE>
<CAPTION>
Northstar Northstar
Income and High Total
Growth Fund Return Fund
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of withholding tax of $16,867 on Income and Growth Fund) $ 4,219,973 $ 157,750
Interest 4,658,700 40,786,080
Total investment income 8,878,673 40,943,830
EXPENSES:
Investment advisory and management fees 1,548,967 2,639,662
Distribution fees:
Class A 242,908 382,172
Class B 671,688 2,028,952
Class C 583,907 296,918
Transfer agent fees and expenses:
Class A 138,245 231,421
Class B 137,683 404,856
Class C 86,510 58,639
Administrative services fees 242,294 418,963
Fund accounting fees 165,223 287,982
Custodian fees and expenses 36,890 70,773
Printing and postage expenses 34,073 55,570
Registration fees 31,939 143,237
Audit expenses 27,913 31,879
Trustee expenses 19,969 20,004
Miscellaneous expenses 62,450 52,537
Total expenses 4,030,659 7,123,565
Net investment income 4,848,014 33,820,265
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 23,384,520 6,942,609
Net realized loss on foreign currency (63) 0
Net unrealized appreciation (depreciation) of investments (354,693) 12,167,393
Net realized and unrealized gain on investments 23,029,764 19,110,002
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $27,877,778 $52,930,267
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
NORTHSTAR TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Northstar Northstar
Income and Growth Fund High Total Return Fund
For the year For the year For the year For the year
ended ended ended ended
October 31, October 31, October 31, October 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 4,848,014 $ 4,652,135 $ 33,820,265 $ 13,258,203
Net realized gain (loss) on investments 23,384,520 (1,378,420) 6,942,609 (2,572,908)
Net realized loss on foreign currency (63) (38,505) 0 0
Net change in unrealized appreciation (depreciation)
of investments (354,693) 16,414,821 12,167,393 4,695,216
Increase in net assets resulting from operations 27,877,778 19,650,031 52,930,267 15,380,511
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class A (2,181,639) (2,390,482) (13,178,032) (7,078,564)
Class B (1,332,583) (1,286,761) (19,778,603) (5,602,745)
Class C (1,190,706) (885,802) (2,906,227) (544,101)
(4,704,928) (4,563,045) (35,862,862) (13,225,410)
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 32,261,734 79,489,052 387,483,470 128,604,858
Net asset value of shares issued to shareholders in
reinvestment of dividends 3,175,945 2,970,631 12,475,223 5,240,098
35,437,679 82,459,683 399,958,693 133,844,956
Cost of shares redeemed (31,818,353) (22,320,893) (43,950,880) (19,082,236)
Net increase in net assets derived from capital share
transactions 3,619,326 60,138,790 356,007,813 114,762,720
Net increase in net assets 26,792,176 75,225,776 373,075,218 116,917,821
NET ASSETS:
Beginning of period 190,038,626 114,812,850 195,923,958 79,006,137
End of period (including undistributed
(overdistributed) net investment income for October
31, 1996 and October 31, 1995 of $507,445, $364,359
and ($1,852,576), $190,021, respectively) $ 216,830,802 $ 190,038,626 $ 568,999,176 $ 195,923,958
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
NORTHSTAR TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
(Northstar logo appears here)
<TABLE>
<CAPTION>
Net realized Dividends Net Net
Net Asset & unrealized declared Asset Assets,
Value, Net gain (loss) Total from from net Value, end of
Period beginning investment on investment investment end of Total period
ended of period income investments operations income period Return (000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Income and Growth Fund, Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/08/93-
10/31/94 $ 10.00 $ 0.30 ($0.05) $ 0.25 ($0.25) $10.00 2.48% $72,223
10/31/95 10.00 0.35 0.84 1.19 (0.33) 10.86 13.19 76,031
10/31/96 10.86 0.32 1.29 1.61 (0.31) 12.16 14.48 85,250
<CAPTION>
Income and Growth Fund, Class B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/09/94-
10/31/94 10.64 0.20 (0.65) (0.45) (0.20) 9.99 (4.20) 37,767
10/31/95 9.99 0.27 0.85 1.12 (0.27) 10.84 12.31 60,347
10/31/96 10.84 0.24 1.28 1.52 (0.23) 12.13 13.60 71,123
<CAPTION>
Income and Growth Fund, Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/21/94-
10/31/94 10.37 0.20 (0.38) (0.18) (0.20) 9.99 (1.75) 4,823
10/31/95 9.99 0.27 0.85 1.12 (0.28) 10.83 12.33 53,661
10/31/96 10.83 0.24 1.28 1.52 (0.23) 12.12 13.68 60,458
<CAPTION>
High Total Return Fund, Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/08/93-
10/31/94 5.00 0.41 (0.60) (0.19) (0.40) 4.41 (4.11) 50,797
10/31/95 4.41 0.48 0.07 0.55 (0.48) 4.48 13.02 88,552
10/31/96 4.48 0.46 0.32 0.78 (0.48) 4.78 18.14 167,698
<CAPTION>
High Total Return Fund, Class B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/09/94-
10/31/94 5.20 0.33 (0.80) (0.47) (0.32) 4.41 (9.30) 25,880
10/31/95 4.41 0.45 0.06 0.51 (0.45) 4.47 11.97 96,362
10/31/96 4.47 0.43 0.32 0.75 (0.45) 4.77 17.08 346,919
<CAPTION>
High Total Return Fund, Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/21/94-
10/31/94 5.06 0.26 (0.65) (0.39) (0.26) 4.41 (7.21) 2,330
10/31/95 4.41 0.44 0.09 0.53 (0.45) 4.49 12.44 11,011
10/31/96 4.49 0.43 0.32 0.75 (0.45) 4.79 17.28 54,382
<CAPTION>
Ratio of Ratio of
to expense investment
average reimbursement income to Average
Period net to average average Portfolio Commissions
ended assets net assets net assets turnover Per Share
<S> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C>
11/08/93
10/31/94 1.50% 0.47% 3.73% 26% --
10/31/95 1.51 -- 3.39 91 --
10/31/96 1.52 -- 2.78 147 $0.06
<S> <C> <C> <C> <C> <C>
2/09/94
10/31/94 2.20 0.16 3.00 26 --
10/31/95 2.23 -- 2.66 91 --
10/31/96 2.26 -- 2.04 147 0.06
<S> <C> <C> <C> <C> <C>
3/21/94
10/31/94 2.20 0.06 2.87 26 --
10/31/95 2.22 -- 2.67 91 --
10/31/96 2.20 -- 2.10 147 0.06
<S> <C> <C> <C> <C> <C>
11/08/93
10/31/94 1.50 0.99 10.09 163 --
10/31/95 1.55 -- 10.90 145 --
10/31/96 1.52 -- 9.86 158 --
<S> <C> <C> <C> <C> <C>
2/09/94
10/31/94 2.20 0.20 9.72 163 --
10/31/95 2.25 -- 10.20 145 --
10/31/96 2.23 -- 9.14 158 --
<S> <C> <C> <C> <C> <C>
3/21/94
10/31/94 2.20 0.11 9.46 163 --
10/31/95 2.27 -- 10.18 145 --
10/31/96 2.23 -- 9.14 158 --
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 1996
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization -- The Northstar Trust (formerly Northstar Advantage Trust), a
business trust, was organized under the laws of the Commonwealth of
Massachusetts on August 18, 1993, and is registered under the Investment Company
Act of 1940 as a diversified open-end management investment company. The names
of each of the two investment series which comprise the Trust (the "Funds") and
their respective investment objectives are set forth below. Each Fund commenced
its public offering of Class A shares on November 8, 1993. The Class B and Class
C share offerings commenced on February 9, 1994 and March 21, 1994,
respectively.
NORTHSTAR INCOME AND GROWTH FUND ("Income and Growth Fund") (formerly
Northstar Advantage Income and Growth Fund) is a diversified portfolio with the
investment objective of current income balanced with the objective of achieving
capital appreciation. The Fund seeks to achieve its objective through
investments in a diversified group of securities selected for their prospects of
current yield and capital appreciation.
NORTHSTAR HIGH TOTAL RETURN FUND ("Total Return Fund") (formerly Northstar
Advantage High Total Return Fund) is a diversified portfolio whose investment
objective is to seek high income. The Fund invests primarily in a diversified
group of fixed income securities which are selected for high income, including
lower rated fixed income securities, convertible securities, securities issued
by U.S. companies in foreign currencies, and securities issued by foreign
governments and companies.
Security Valuation -- Equity securities are valued at the closing sale
prices reported on recognized securities exchanges or lacking any sales, at the
last available bid price. Prices of long-term debt securities are valued on the
basis of last reported sales price, or if no sales are reported, the value is
determined based upon the mean of representative quoted bid or asked prices for
such securities, or, if such prices are not available, at prices provided by
market makers, or at prices for securities of comparable maturity, quality and
type. Short-term debt instruments with remaining maturities of less than 60 days
are valued at amortized cost, unless the Trustees determine that amortized cost
does not reflect the fair value of such obligations. Securities for which market
quotations are not readily available are valued at fair value determined in good
faith by or under direction of the Trustees of the Trust. The books and records
of the Funds are maintained in U.S. dollars. Securities quoted in foreign
currencies are translated into U.S. dollars based on the prevailing exchange
rates on that day. The Adviser uses independent pricing services to price the
Funds' securities.
Management's Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date(s) of financial statements and the reported amounts of
income and expenses during the reporting period(s). Actual results could differ
from those estimates.
Security Transactions, Investment Income and Expenses -- Security
transactions are recorded on the trade date. Realized gains or losses on sales
of investments are calculated on the identified cost basis. Interest income is
recorded on the accrual basis except when collection is not expected; discounts
are accrued, and premiums amortized to par at maturity; dividend income is
recorded on the ex-dividend dates. Income, expenses (except class specific
expenses), and realized/unrealized gains/losses, are allocated proportionately
to each class of shares based upon the relative net asset value of outstanding
shares.
Distributions to shareholders -- Dividends from net investment income are
declared and paid monthly by the Total Return Fund, and declared and paid
quarterly by the Income and Growth Fund. Distributions of net realized capital
gains, if any, are declared annually; however, to the extent that a net realized
capital gain can be reduced by a capital loss carryover, such gain will not be
distributed.
The Funds may periodically make reclassifications among certain of their
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulation which may differ from generally accepted accounting
principles. As of October 31, 1996, the following amounts have been reclassified
from undistributed net investment income to accumulated net realized gain on
investments and paid-in-capital:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED NET
NET REALIZED
INVESTMENT GAIN ON
INCOME INVESTMENTS PAID-IN-CAPITAL
<S> <C> <C> <C>
Income and Growth
Fund (364,422) 389,131 (24,709)
Total Return Fund 1,852,576 (1,852,576 )
</TABLE>
These restatements did not affect net investment income, net realized gain
on investments, or net assets for the year ended October 31, 1996.
Foreign Currency -- The Fund isolates that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held.
Net realized gain (loss) on foreign currency transactions represents the
foreign exchange:
(1) gains and losses from the sale of holdings of foreign currencies, (2)
gains and losses between trade date and settlement date on investment securities
transactions and forward exchange contracts, and (3) gains and losses from the
difference between amounts of interest and dividends recorded and the amounts
actually received.
Forward Foreign Currency Contracts and Options and Futures -- The Funds may
enter into forward foreign currency contracts ("contracts") to purchase or sell
securities at a specified rate at a future date. The Funds may enter into these
contracts solely for hedging purposes.
The Funds write and purchase put and call options on foreign currencies. The
premium paid by the Funds for the purchase
22
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 1996
(Northstar logo appears here)
of a call or put option is recorded as an investment and subsequently
"marked-to-market" to reflect the current market value of the option. If an
option which the Funds have purchased expires on the stipulated expiration date,
the Funds realize a loss in the amount of the cost of the option.
The amount of potential gain or loss to the Funds upon exercise of a written
call option is the value (in U.S. dollars) of the currency sold, less the value
of the U.S. dollars received in exchange. The amount of potential gain or loss
to the Funds upon exercise of a written put option is the value (in U.S.
dollars) of the currency received, less the value of the U.S. dollars paid in
exchange.
Risks may arise upon entering these contracts from the potential inability
of counterparties to meet the terms of their contract and from unanticipated
movement in the value of a foreign currency relative to the U.S. dollar.
Initial margin deposits made upon entering into futures contracts are
recognized as assets due from the broker (the Fund's agent in acquiring the
futures position). During the period the futures contract is open, changes in
the value of the contract are recognized as unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the contract
at the end of each day's trading.
Variation margin payments are received or made, depending upon whether
unrealized gains or losses are incurred. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transaction and the Fund's basis in the contract.
Repurchase Agreements -- The Funds' Custodian takes possession of collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to assure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Funds have the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds' may be delayed or limited.
Federal Income Taxes -- The Trust intends to comply with the special
provisions of the Internal Revenue Code available to investment companies and to
distribute all of the taxable net income to their respective shareholders.
Therefore, no Federal income tax provision or excise tax provision is required.
Organization Costs -- Costs incurred by the Trust in connection with its
organization of each Fund have been deferred and are being amortized over a
period of five years from the date the Fund's commenced operations. Each Fund
offers three classes of shares.
NOTE 2. INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
NWNL Northstar, Inc. (and its wholly owned operating subsidiaries, Northstar
Investment Management Corp., Northstar Distributors, Inc. and Northstar
Administrators Corp.) is an 80% owned subsidiary of Reliastar Financial Corp.
Northstar Investment Management Corp. (the "Adviser") serves as each Fund's
investment adviser. Each Fund pays the Adviser an investment advisory fee
calculated at an annual rate of 0.75% on the first $250,000,000 of aggregate
average daily net assets; 0.70% on the next $250,000,000 of such assets; 0.65%
on the next $250,000,000 of such assets; 0.60% on the next $250,000,000 of such
assets; and 0.55% on the remaining aggregate daily net assets of each Fund in
excess of $1 billion. For the twelve months ended October 31, 1996, the Adviser
earned $4,188,629 in investment advisory fees. Northstar Administrators Corp.
(the "Administrator"), an affiliate of the Adviser, serves as each Fund's
administrator. The Funds pay the Administrator a fee calculated at an annual
rate of 0.10% of each Fund's average daily net assets, and an annual shareholder
account servicing fee of $5.00, payable semi-annually, for each account of
beneficial owners of shares. For the twelve months ended October 31, 1996, the
Administrator earned $661,257 in administrative and account servicing fees.
Northstar Distributors, Inc. (the "Distributor"), an affiliate of the Adviser
and the Administrator, is the distributor of each Fund's shares. Under separate
Plans of Distribution pertaining to Class A, Class B, and Class C shares, the
Trust pays the Distributor monthly service fees at an annual rate of 0.25% of
the average daily net assets in the case of Class A, Class B and Class C shares,
and monthly distribution fees at the annual rate of 0.05% of the average daily
net assets of Class A shares, and 0.75% of the average daily net assets of Class
B and Class C shares. At October 31, 1996 the Trust owed the Distributor
$497,647 in service and distribution fees. The Distributor also receives the
proceeds of the initial sales charges paid by shareholders upon the purchase of
Class A shares, and the contingent deferred sales charge paid by shareholders
upon certain redemptions of Class A, Class B and Class C shares. For the twelve
months ended October 31, 1996, the Distributor earned the following amounts in
sales charges:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
<S> <C> <C> <C>
Initial Sales Charges $578,663 N/A N/A
Contingent Deferred Sales
Charges $ N/A $682,146 $26,417
</TABLE>
NOTE 3. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
(excluding short-term investments) for the twelve months ended October 31, 1996,
were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
<S> <C> <C>
Aggregate Purchases $300,335,582 $811,562,180
Aggregate Sales $290,807,566 $539,337,900
</TABLE>
23
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 1996
U.S. Government Securities included on the previous page were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
<S> <C> <C>
Aggregate Purchases $ -- $ --
Aggregate Sales $ 40,167,232 $ --
</TABLE>
NOTE 4. PORTFOLIO SECURITIES (TAX BASIS)
The cost of securities for federal income tax purposes and the aggregate
appreciation and depreciation of securities at October 31, 1996 were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
<S> <C> <C>
Cost (tax basis) $193,499,596 $482,125,566
Appreciated Securities 20,372,548 21,459,681
Depreciated Securities (6,298,639 ) (12,464,607 )
Net unrealized
appreciation/depreciation $14,073,909 $ 8,995,074
</TABLE>
NOTE 5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each Fund for the twelve months ended
October 31, 1996, were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
I. CLASS A GROWTH FUND FUND
<S> <C> <C>
Shares sold 1,198,735 19,103,809
Reinvested dividends 107,624 1,198,552
Shares redeemed (1,296,115 ) (4,968,565 )
Net increase 10,244 15,333,796
</TABLE>
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
II. CLASS B GROWTH FUND FUND
<S> <C> <C>
Shares sold 1,141,776 53,275,516
Reinvested dividends 67,273 1,254,865
Shares redeemed (914,164 ) (3,380,239 )
Net increase 294,885 51,150,142
</TABLE>
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
III. CLASS C GROWTH FUND FUND
<S> <C> <C>
Shares sold 479,099 9,644,386
Reinvested dividends 100,714 195,560
Shares redeemed (546,984 ) (944,003 )
Net increase 32,829 8,895,943
</TABLE>
Transactions in capital shares of each Fund for the twelve months ended
October 31, 1995, were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
I. CLASS A GROWTH FUND FUND
<S> <C> <C>
Shares sold 1,096,176 10,429,281
Reinvested dividends 135,106 737,521
Shares redeemed (1,453,383 ) (2,896,286 )
Net increase (decrease) (222,101 ) 8,270,516
</TABLE>
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
II. CLASS B GROWTH FUND FUND
<S> <C> <C>
Shares sold 2,311,816 16,531,155
Reinvested dividends 72,181 397,287
Shares redeemed (597,155 ) (1,252,934 )
Net increase 1,786,842 15,675,508
</TABLE>
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
III. CLASS C GROWTH FUND FUND
<S> <C> <C>
Shares sold 4,511,380 2,002,533
Reinvested dividends 82,927 52,744
Shares redeemed (121,341 ) (131,827 )
Net increase 4,472,966 1,923,450
</TABLE>
NOTE 6. CREDIT RISK AND DEFAULTED SECURITIES
Although the Funds have a diversified portfolio, the Total Return Fund had
77.15% of its portfolio invested in lower rated and comparable quality unrated
high yield securities. Investments in higher yield securities are accompanied by
a greater degree of credit risk and such lower rated securities tend to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities, because such securities are generally unsecured and
are often subordinated to other creditors of the issuer. At October 31, 1996,
the Total Return Fund held Burlington Motor Holdings, Inc., Color Tile, Inc.,
and Wherehouse Entertainment, Inc., securities in bankruptcy. The aggregate
value of these securities represented $199,500 or 0.04% of the Total Return
Fund's assets.
For financial reporting purposes, it is each Fund's accounting practice to
discontinue accrual of income and provide an estimate for probable losses due to
unpaid interest income on defaulted bonds for the current reporting period.
NOTE 7. SECURITY LOANS
Each Fund may lend its securities to brokers, dealers and other financial
institutions in amounts up to one third of the value of its total assets. The
loans are fully collateralized at all times by cash or liquid high grade
securities. As with other extensions of credit, each Fund may bear the risk of
delay in recovery or even loss of rights in the collateral should the borrower
of the securities fail financially. The Funds receive compensation for lending
its securities in the form of fees or from all or a portion of the income from
investment of the collateral. The Funds also continue to earn income on the
securities loaned. At October 31, 1996, the Funds did not have any securities on
loan.
24
<PAGE>
NORTHSTAR TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
(Northstar logo appears here)
To the Shareholders and Trustees of
Northstar Trust:
We have audited the accompanying statement of assets and liabilities of the
Northstar Trust (formerly Northstar Advantage Trust), comprising the 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) (collectively, the "Funds"), including the portfolios of investments, as
of October 31, 1996, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each period presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Funds constituting the Northstar Trust as of October 31,
1996, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods referred to above, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
December 6, 1996
25
TOTAL RETURN CALCULATION- MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR INC & GROWTH A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- --------- ---------- --------- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/ 1/95 1,000.00 11.4500 87.336 87.336 952.84
12/29/95 11.3000 87.954 0.080 6.98 0.000 0.00 0.618 993.88
12/31/95 11.3000 87.954 993.88
3/26/96 11.4400 88.476 0.068 5.97 0.000 0.00 0.522 1,012.17
6/25/96 11.6400 89.064 0.077 6.85 0.000 0.00 0.588 1,036.70
9/25/96 11.7500 89.701 0.084 7.49 0.000 0.00 0.588 1,053.99
10/31/96 12.1600 89.701 1,090.76
</TABLE>
FORMULA - Average Annual Return: ERV= P(1+T) n
Overall Total Return: ERV/P -1
Where: P= Initial Investment $1,000.00
ERV= Ending Redeemable Value $1,090.76
n= Number of Time Periods 1.00
T= Average Annual Total Return 9.08%
Overall Total Return 9.08%
<PAGE>
TOTAL RETURN CALCULATION- MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR INC & GROWTH A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- --------- ---------- --------- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/08/93 1,000.00 10.5000 95.238 95.238 952.38
12/31/93 10.2700 95.470 0.025 2.38 0.000 0.00 0.232 980.48
12/31/93 10.2700 95.470 980.48
3/31/94 10.1900 96.032 0.060 5.73 0.000 0.00 0.562 978.57
6/31/94 9.7200 96.842 0.082 7.87 0.000 0.00 0.810 941.30
9/26/94 9.9800 97.604 0.079 7.60 0.000 0.00 0.762 974.09
12/23/94 9.5700 98.598 0.097 9.51 0.000 0.00 0.994 943.58
12/31/94 9.5900 98.598 945.55
3/23/95 9.8000 99.272 0.067 6.61 0.000 0.00 0.674 972.87
6/22/95 10.6100 100.072 0.085 8.49 0.000 0.00 0.800 1,061.76
9/26/95 10.8700 100.813 0.080 8.05 0.000 0.00 0.741 1,095.84
12/29/95 11.3000 101.525 0.080 8.05 0.000 0.00 0.712 1,147.23
12/31/95 11.3000 101.525 1,147.23
3/26/96 11.4400 102.127 0.068 6.89 0.000 0.00 0.602 1,168.33
6/25/96 11.6400 102.807 0.077 7.91 0.000 0.00 0.680 1,196.67
9/25/96 11.7500 103.543 0.084 8.65 0.000 0.00 0.736 1,216.63
10/31/96 12.1600 103.543 1,259.08
</TABLE>
FORMULA - Average Annual Return: ERV= P(1+T)^n
Overall Total Return: ERV/P -1
Where: P= Initial Investment $1,000.00
ERV= Ending Redeemable Value $1,259.08
n= Number of Time Periods 2.98
T= Average Annual Total Return 8.04%
Overall Total Return 25.91%
<PAGE>
TOTAL RETURN CALCULATION- MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR INC & GROWTH B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- --------- ---------- --------- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/ 1/95 1,000.00 10.8900 91.827 91.827 1,000.00
12/29/95 11.2800 92.313 0.060 5.48 0.000 0.00 0.486 1,041.29
12/31/95 11.2800 92.313 1,041.29
3/26/96 11.4300 92.713 0.050 4.57 0.000 0.00 0.400 1,059.71
6/25/96 11.6300 93.162 0.056 5.22 0.000 0.00 0.449 1,083.47
9/25/96 11.7300 93.654 0.062 5.77 0.000 0.00 0.492 1,098.56
10/31/96 12.1300 93.654 1,136.02
10/31/96 Less: 3.000% Contingent Deferred Sales Charge 50.00
10/31/96 Net Ending Redeemable Value 1,086.02
</TABLE>
FORMULA - Average Annual Total Return: ERV= P(1+T)^n
Overall Total Return: ERV/P -1
Where: P= Initial Investment $1,000.00
ERV= Ending Redeemable Value $1,086.02
n= Number of Time Periods 1.00
T= Average Annual Total Return 8.60%
Overall Total Return 8.60%
<PAGE>
TOTAL RETURN CALCULATION- MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR INC & GROWTH B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- --------- ---------- --------- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/ 9/94 1,000.00 10.6400 93.985 93.985 1,000.00
3/31/94 10.1900 94.538 0.060 5.64 0.000 0.00 0.553 963.34
6/24/94 9.7200 95.256 0.074 6.98 0.000 0.00 0.718 925.89
9/26/94 9.9800 95.893 0.067 6.36 0.000 0.00 0.637 957.01
12/23/94 9.5700 96.711 0.082 7.83 0.000 0.00 0.818 925.52
12/31/94 9.5900 96.711 927.46
3/23/95 9.7900 97.239 0.053 5.17 0.000 0.00 0.528 951.97
6/22/95 10.6000 97.899 0.072 7.00 0.000 0.00 0.660 1,037.73
9/26/95 10.8600 98.458 0.062 6.07 0.000 0.00 0.559 1,069.25
12/29/95 11.2800 98.978 0.060 5.87 0.000 0.00 0.520 1,116.47
12/31/95 11.2800 98.978 1,116.47
3/26/96 11.4300 99.407 0.050 4.90 0.000 0.00 0.429 1,136.22
6/25/96 11.6300 99.889 0.056 5.60 0.000 0.00 0.482 1,161.71
9/25/96 11.7300 100.416 0.062 6.18 0.000 0.00 0.527 1,177.88
10/31/96 12.1300 100.416 1,218.05
10/31/96 Less: 3.000% Contingent Deferred Sales Charge 30.00
10/31/96 Net Ending Redeemable Value 1,188.05
</TABLE>
FORMULA - Average Annual Total Return: ERV = P(1+T)^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV= Ending Redeemable Value $1,188.05
n = Number of Time Periods 2.73
T = Average Annual Total Return 6.52%
Overall Total Return 18.80%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR INC & GROWTH C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- --------- ---------- --------- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/ 1/95 1,000.00 10.8800 91.912 91.912 1,000.00
12/29/95 11.2700 92.417 0.062 5.69 0.000 0.00 0.505 1,041.54
12/31/95 11.2700 92.417 1,041.54
3/26/96 11.4100 92.828 0.051 4.69 0.000 0.00 0.411 1,059.17
6/25/96 11.6100 93.291 0.058 5.37 0.000 0.00 0.463 1,083.11
9/25/96 11.7200 93.797 0.064 5.93 0.000 0.00 0.506 1,099.30
10/31/96 12.1200 93.797 1,136.82
10/31/96 Less: 1.000% Contingent Deferred Sales Charge 10.00
10/31/96 Net Ending Redeemable Value 1,126.82
</TABLE>
FORMULA - Average Annual Return: ERV= P(1+T)^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV= Ending Redeemable Value $1,126.82
n = Number of Time Periods 1.00
T = Average Annual Total Return 12.68%
Overall Total Return 12.68%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR INC & GROWTH C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- --------- ---------- --------- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/21/94 1,000.00 10.3700 96.432 96.432 1,000.00
3/31/94 10.1900 97.000 0.060 5.79 0.000 0.00 0.568 988.43
6/24/94 9.7200 97.714 0.071 6.94 0.000 0.00 0.714 949.78
9/26/94 9.9800 98.346 0.065 6.31 0.000 0.00 0.632 981.49
12/23/94 9.5700 99.168 0.080 7.87 0.000 0.00 0.822 949.04
12/31/94 9.5900 99.168 951.02
3/23/95 9.7800 99.875 0.070 6.91 0.000 0.00 0.707 976.78
6/22/95 10.5900 100.511 0.067 6.73 0.000 0.00 0.636 1,064.41
9/26/95 10.8400 101.091 0.063 6.29 0.000 0.00 0.580 1,095.83
12/29/95 11.2700 101.646 0.062 6.26 0.000 0.00 0.555 1,145.55
12/31/95 11.2700 101.646 1,145.55
3/26/96 11.4100 102.098 0.051 5.16 0.000 0.00 0.452 1,164.94
6/25/96 11.6100 102.607 0.058 5.91 0.000 0.00 0.509 1,191.27
9/25/96 11.7200 103.163 0.064 6.52 0.000 0.00 0.556 1,209.07
10/31/96 12.1200 103.163 1,250.34
</TABLE>
FORMULA - Average Annual Total Return: ERV = P(1+T)^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV= Ending Redeemable Value $1,250.34
n = Number of Time Periods 2.62
T = Average Annual Total Return 8.90%
Overall Total Return 25.03%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR HIGH T/R A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- --------- ---------- --------- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/ 1/95 1,000.00 4.7000 212.766 212.766 953.19
11/22/95 4.4800 214.666 0.040 8.51 0.000 0.00 1.900 961.70
12/29/95 4.5800 216.542 0.040 8.59 0.000 0.00 1.876 991.76
12/31/95 4.5800 216.542 991.76
1/26/96 4.6500 218.404 0.040 8.66 0.000 0.00 1.862 1,015.58
2/23/96 4.6800 220.272 0.040 8.74 0.000 0.00 1.868 1,030.87
3/26/96 4.7100 222.142 0.040 8.81 0.000 0.00 1.870 1,046.29
4/25/96 4.7300 224.021 0.040 8.89 0.000 0.00 1.879 1,059.62
5/24/96 4.8000 225.888 0.040 8.96 0.000 0.00 1.867 1,084.26
6/25/96 4.7500 227.791 0.040 9.04 0.000 0.00 1.903 1,082.01
7/26/96 4.7000 229.729 0.040 9.11 0.000 0.00 1.938 1,079.73
8/27/96 4.6800 231.693 0.040 9.19 0.000 0.00 1.964 1,084.32
9/25/96 4.7700 233.636 0.040 9.27 0.000 0.00 1.943 1,114.44
10/25/96 4.7600 235.600 0.040 9.35 0.000 0.00 1.964 1,121.46
10/31/96 4.7800 235.600 1,126.17
</TABLE>
FORMULA - Average Annual Total Return: ERV = P(1+T)^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV= Ending Redeemable Value $1,126.17
n = Number of Time Periods 1.00
T = Average Annual Total Return 12.62%
Overall Total Return 12.62%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
----------------------------------------------------------
NORTHSTAR HIGH T/R A
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ ---------- --------- --------- ---------- ---------- ------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/ 8/93 1,000.00 5.2500 190.476 190.476 952.38
11/23/93 5.0200 190.962 0.013 2.44 0.000 0.00 0.486 958.63
12/27/93 5.0900 192.377 0.038 7.20 0.000 0.00 1.415 979.20
12/31/93 5.0900 192.377 979.20
1/25/94 5.1800 193.788 0.038 7.31 0.000 0.00 1.411 1,003.82
2/22/94 5.1600 195.214 0.038 7.36 0.000 0.00 1.426 1,007.30
3/25/94 5.0300 196.689 0.038 7.42 0.000 0.00 1.475 989.35
4/25/94 4.7900 198.282 0.039 7.63 0.000 0.00 1.593 949.77
5/24/94 4.7600 199.898 0.039 7.69 0.000 0.00 1.616 951.51
6/24/94 4.7600 201.495 0.038 7.60 0.000 0.00 1.597 959.12
7/25/94 4.6200 203.240 0.040 8.06 0.000 0.00 1.745 938.97
8/25/94 4.5400 205.031 0.040 8.13 0.000 0.00 1.791 930.84
9/26/94 4.4800 206.861 0.040 8.20 0.000 0.00 1.830 926.74
10/25/94 4.4200 208.732 0.040 8.27 0.000 0.00 1.871 922.60
11/23/94 4.3200 210.665 0.040 8.35 0.000 0.00 1.933 910.07
12/23/94 4.2200 212.663 0.040 8.43 0.000 0.00 1.998 897.44
12/31/94 4.2100 212.663 895.31
1/25/95 4.2300 214.675 0.040 8.51 0.000 0.00 2.012 908.08
2/22/95 4.3100 216.668 0.040 8.59 0.000 0.00 1.993 933.84
3/23/95 4.3400 218.666 0.040 8.67 0.000 0.00 1.998 949.01
4/25/95 4.4300 220.641 0.040 8.75 0.000 0.00 1.975 977.44
5/24/95 4.5000 222.603 0.040 8.83 0.000 0.00 1.962 1,001.71
6/22/95 4.3800 224.635 0.040 8.90 0.000 0.00 2.032 983.90
7/25/95 4.4800 226.642 0.040 8.99 0.000 0.00 2.007 1,015.36
8/24/95 4.4900 228.662 0.040 9.07 0.000 0.00 2.020 1,026.69
9/26/95 4.4900 230.700 0.040 9.15 0.000 0.00 2.038 1,035.84
10/25/95 4.5000 232.751 0.040 9.23 0.000 0.00 2.051 1,047.38
11/22/95 4.4800 234.829 0.040 9.31 0.000 0.00 2.078 1,052.03
12/29/95 4.5800 236.879 0.040 9.39 0.000 0.00 2.050 1,084.91
12/31/95 4.5800 236.879 1,084.91
1/26/96 4.6500 238.918 0.040 9.48 0.000 0.00 2.039 1,110.97
2/23/96 4.6800 240.961 0.040 9.56 0.000 0.00 2.043 1,127.70
3/26/96 4.7100 243.008 0.040 9.64 0.000 0.00 2.047 1,144.57
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ ---------- --------- --------- ---------- ---------- ------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/25/96 4.7300 245.063 0.040 9.72 0.000 0.00 2.055 1,159.15
5/24/96 4.8000 247.105 0.040 9.80 0.000 0.00 2.042 1,186.10
6/25/96 4.7500 249.185 0.040 9.88 0.000 0.00 2.080 1,183.63
7/26/96 4.7000 251.306 0.040 9.97 0.000 0.00 2.121 1,181.14
8/27/96 4.6800 253.453 0.040 10.05 0.000 0.00 2.147 1,186.16
9/25/96 4.7700 255.579 0.040 10.14 0.000 0.00 1.126 1,219.11
10/25/96 4.7600 257.726 0.040 10.22 0.000 0.00 2.147 1,226.78
10/31/96 4.7800 257.726 1,231.93
</TABLE>
FORMULA -- Average Annual Total Return: ERV = P(1+T) ^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV = Ending Redeemable Value $1,231.93
n = Number of Time Periods 2.98
T = Average Annual Total Return 7.25%
Overall Total Return 23.19%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR HIGH T/R B
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- ----------- -------- ---------- ------------ ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/ 1/95 1,000.00 4.4700 223.714 223.714 1,000.00
11/22/95 4.4700 225.584 0.037 8.36 0.000 0.00 1.870 1,008.36
12/29/95 4.5700 227.429 0.037 8.43 0.000 0.00 1.845 1,039.35
12/31/95 4.5700 227.429 1,039.35
1/26/96 4.6400 229.254 0.037 8.47 0.000 0.00 1.825 1,063.74
2/23/96 4.6800 231.077 0.037 8.53 0.000 0.00 1.823 1,081.44
3/26/96 4.7100 232.901 0.037 8.59 0.000 0.00 1.824 1,096.96
4/25/96 4.7200 234.736 0.037 8.66 0.000 0.00 1.835 1,107.95
5/24/96 4.8000 236.551 0.037 8.71 0.000 0.00 1.815 1,135.44
6/25/96 4.7500 238.397 0.037 8.77 0.000 0.00 1.846 1,132.39
7/26/96 4.6900 240.284 0.037 8.85 0.000 0.00 1.887 1,126.93
8/27/96 4.6800 242.188 0.037 8.91 0.000 0.00 1.904 1,133.44
9/25/96 4.7700 244.062 0.037 8.94 0.000 0.00 1.874 1,164.18
10/25/96 4.7600 245.957 0.037 9.02 0.000 0.00 1.895 1,170.76
10/31/96 4.7700 245.957 1,173.21
10/31/96 Less: 5.000% Contingent Deferred Sales Charge 50.00
10/31/96 Net Ending Redeemable Value 1,123.21
</TABLE>
FORMULA -- Average Annual Total Return: ERV = P(1+T) ^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV = Ending Redeemable Value $1,123.21
n = Number of Time Periods 1.00
T = Average Annual Total Return 12.32%
Overall Total Return 12.32%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR HIGH T/R B
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ------- ------- --------- --------- --------- --------- ---------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/ 9/94 1,000.00 5.2000 192.308 192.308 1,000.00
2/22/94 5.1600 192.957 0.017 3.35 0.000 0.00 0.649 995.66
3/25/94 5.0300 194.301 0.035 6.76 0.000 0.00 1.344 977.33
4/25/94 4.7900 195.754 0.036 6.96 0.000 0.00 1.453 937.66
5/24/94 4.7600 197.227 0.036 7.01 0.000 0.00 1.473 938.80
6/24/94 4.7600 198.710 0.036 7.06 0.000 0.00 1.483 945.86
7/25/94 4.6200 200.310 0.037 7.39 0.000 0.00 1.600 925.43
8/25/94 4.5400 201.951 0.037 7.45 0.000 0.00 1.641 916.86
9/26/94 4.4800 203.627 0.037 7.51 0.000 0.00 1.676 912.25
10/25/94 4.4200 205.340 0.037 7.57 0.000 0.00 1.713 907.60
11/23/94 4.3200 207.109 0.037 7.64 0.000 0.00 1.769 894.71
12/23/94 4.2200 208.934 0.037 7.70 0.000 0.00 1.825 881.70
12/31/94 4.2100 208.934 879.61
1/25/95 4.2300 210.771 0.037 7.77 0.000 0.00 1.837 891.56
2/22/95 4.3100 212.604 0.038 7.90 0.000 0.00 1.833 916.32
3/23/95 4.3400 214.438 0.037 7.96 0.000 0.00 1.834 930.66
4/25/95 4.4300 216.248 0.037 8.02 0.000 0.00 1.810 957.98
5/24/95 4.4900 218.079 0.038 8.22 0.000 0.00 1.831 979.17
6/22/95 4.3700 219.942 0.037 8.14 0.000 0.00 1.863 961.15
7/25/95 4.4800 221.772 0.037 8.20 0.000 0.00 1.830 993.54
8/24/95 4.4800 223.618 0.037 8.27 0.000 0.00 1.846 1,001.81
9/26/95 4.4900 225.478 0.037 8.35 0.000 0.00 1.860 1,012.40
10/25/95 4.4900 227.349 0.037 8.40 0.000 0.00 1.871 1,020.80
11/22/95 4.4700 229.251 0.037 8.50 0.000 0.00 1.902 1,024.75
12/29/95 4.5700 231.124 0.037 8.56 0.000 0.00 1.873 1,056.24
12/31/95 4.5700 231.124 1,056.24
1/26/96 4.6400 232.977 0.037 8.60 0.000 0.00 1.853 1,081.01
2/23/96 4.6800 234.830 0.037 8.67 0.000 0.00 1.853 1,099.00
3/26/96 4.7100 236.684 0.037 8.73 0.000 0.00 1.854 1,114.78
4/25/96 4.7200 238.548 0.037 8.80 0.000 0.00 1.864 1,125.95
5/24/96 4.8000 240.392 0.037 8.85 0.000 0.00 1.844 1,153.88
6/25/96 4.7500 242.270 0.037 8.92 0.000 0.00 1.878 1,150.78
7/26/96 4.6900 244.187 0.037 8.99 0.000 0.00 1.917 1,145.24
8/27/96 4.6800 246.123 0.037 9.06 0.000 0.00 1.936 1,151.86
<PAGE>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ------- ------- --------- --------- --------- --------- ---------- ------------ ------------- ---------- ------------
9/25/96 4.7700 248.029 0.037 9.09 0.000 0.00 1.909 1,183.10
10/25/96 4.7600 249.963 0.037 9.16 0.000 0.00 1.924 1,189.78
10/31/96 4.7700 249.953 1,192.28
10/31/96 Less: 3.000% Contingent Deferred Sales Charge 27.52
10/31/96 Net Ending Redeemable Value 1,164.76
</TABLE>
FORMULA -- Average Annual Total Return: ERV = P(1+T) ^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV = Ending Redeemable Value $1,164.76
n = Number of Time Periods 2.73
T = Average Annual Total Return 5.75%
Overall Total Return 16.48%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR HIGH T/R C
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ----- ------ --------- ----------- -------- ---------- ------------ ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/ 1/95 1,000.00 4.4900 222.717 222.717 1,000.00
11/22/95 4.4900 224.570 0.037 8.32 0.000 0.00 1.853 1,008.32
12/29/95 4.5900 226.411 0.038 8.45 0.000 0.00 1.841 1,039.23
12/31/95 4.5900 226.411 1,039.23
1/26/96 4.6600 228.233 0.038 8.49 0.000 0.00 1.822 1,063.57
2/23/96 4.7600 230.027 0.037 8.54 0.000 0.00 1.794 1,094.93
3/26/96 4.7300 231.845 0.037 8.60 0.000 0.00 1.818 1,096.63
4/25/96 4.7400 233.674 0.037 8.67 0.000 0.00 1.829 1,107.61
5/24/96 4.8200 235.481 0.037 8.71 0.000 0.00 1.807 1,135.02
6/25/96 4.7700 237.320 0.037 8.77 0.000 0.00 1.839 1,132.02
7/26/96 4.7100 239.199 0.037 8.85 0.000 0.00 1.879 1,126.63
8/27/96 4.7000 241.097 0.037 8.92 0.000 0.00 1.898 1,133.16
9/25/96 4.7900 242.968 0.037 8.96 0.000 0.00 1.871 1,163.82
10/25/96 4.7800 244.849 0.037 8.99 0.000 0.00 1.881 1,170.38
10/31/96 4.7900 244.849 1,172.83
10/31/96 Less: 1.000% Contingent Deferred Sales Charge 10.00
10/31/96 Net Ending Redeemable Value 1,162.83
</TABLE>
FORMULA -- Average Annual Total Return: ERV = P(1+T) ^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV = Ending Redeemable Value $1,162.83
n = Number of Time Periods 1.00
T = Average Annual Total Return 16.28%
Overall Total Return 16.28%
<PAGE>
TOTAL RETURN CALCULATION - MAXIMUM SALES CHARGE INCLUDED
NORTHSTAR HIGH T/R C
<TABLE>
<CAPTION>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ------- ------- --------- --------- --------- --------- ---------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/21/94 1,000.00 5.0600 197.628 197.628 1,000.00
3/25/94 5.0300 197.745 0.003 0.59 0.000 0.00 0.117 994.66
4/25/94 4.7900 199.223 0.036 7.08 0.000 0.00 1.478 954.28
5/24/94 4.7600 200.721 0.036 7.13 0.000 0.00 1.498 955.43
6/24/94 4.7600 202.232 0.036 7.19 0.000 0.00 1.511 962.62
7/25/94 4.6200 203.860 0.037 7.52 0.000 0.00 1.628 941.83
8/25/94 4.5400 205.530 0.037 7.58 0.000 0.00 1.670 933.11
9/26/94 4.4800 207.238 0.037 7.65 0.000 0.00 1.708 928.43
10/25/94 4.4200 208.982 0.037 7.71 0.000 0.00 1.744 923.70
11/23/94 4.3200 210.781 0.037 7.77 0.000 0.00 1.799 910.57
12/23/94 4.2200 212.639 0.037 7.84 0.000 0.00 1.858 897.34
12/31/94 4.2100 212.639 895.21
1/25/95 4.2400 214.505 0.037 7.91 0.000 0.00 1.866 909.50
2/22/95 4.3200 216.366 0.038 8.04 0.000 0.00 1.861 934.70
3/23/95 4.3500 218.228 0.037 8.10 0.000 0.00 1.862 949.29
4/25/95 4.4500 220.062 0.037 8.16 0.000 0.00 1.834 979.28
5/24/95 4.5100 221.916 0.038 8.36 0.000 0.00 1.854 1,000.84
6/22/95 4.3900 223.804 0.037 8.29 0.000 0.00 1.888 982.50
7/25/95 4.5000 225.660 0.037 8.35 0.000 0.00 1.856 1,015.47
8/24/95 4.5000 227.529 0.037 8.41 0.000 0.00 1.869 1,023.88
9/26/95 4.5000 229.418 0.037 8.50 0.000 0.00 1.889 1,032.38
10/25/95 4.5100 231.314 0.037 8.55 0.000 0.00 1.896 1,043.23
11/22/95 4.4900 233.238 0.037 8.64 0.000 0.00 1.924 1,047.24
12/29/95 4.5900 235.151 0.038 8.78 0.000 0.00 1.913 1,079.34
12/31/95 4.5900 235.151 1,079.34
1/26/96 4.6600 237.044 0.038 8.82 0.000 0.00 1.893 1,104.63
2/23/96 4.7600 238.907 0.037 8.87 0.000 0.00 1.863 1,137.20
3/26/96 4.7300 240.795 0.037 8.93 0.000 0.00 1.888 1,138.96
4/25/96 4.7400 242.696 0.037 9.01 0.000 0.00 1.901 1,150.38
5/24/96 4.8200 244.574 0.037 9.05 0.000 0.00 1.878 1,178.85
6/25/96 4.7700 246.484 0.037 9.11 0.000 0.00 1.910 1,175.73
7/26/96 4.7100 248.435 0.037 9.19 0.000 0.00 1.951 1,170.13
8/27/96 4.7000 250.405 0.037 9.26 0.000 0.00 1.970 1,176.90
9/25/96 4.7900 252.347 0.037 9.30 0.000 0.00 1.942 1,208.74
<PAGE>
Price per Shares Cumulative Dividends Reinvested Capital Gains Reinvested Reinvested Total
Date Amount Share Purchased Shares per Share Dividends per Share Capital Gains Shares Market Value
- ------- ------- --------- --------- --------- --------- ---------- ------------ ------------- ---------- ------------
10/25/96 4.7800 254.299 0.037 9.33 0.000 0.00 1.952 1,215.55
10/31/96 4.7900 254.299 1,218.09
</TABLE>
FORMULA -- Average Annual Total Return: ERV = P(1+T) ^n
Overall Total Return: ERV/P -1
Where: P = Initial Investment $1,000.00
ERV = Ending Redeemable Value $1,218.09
n = Number of Time Periods 2.62
T = Average Annual Total Return 7.82%
Overall Total Return 21.81%
<PAGE>
<PAGE>
C O M P O S I T E
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
FOR
THE NORTHSTAR FUNDS
AND
NORTHSTAR TRUST
I. INTRODUCTION
The Northstar Funds and the Northstar Trust hereby adopt this Multiple
Class Plan (the "Plan") pursuant to Rule 18f-3 under the Investment
Company Act of 1940 (the "1940 Act") on behalf of the current series of
The Northstar Funds: Northstar Special Fund, Northstar Growth Fund,
Northstar Balance Sheet Opportunities Fund, Northstar Government
Securities Fund, Northstar Strategic Income Fund, and Northstar High
Yield Fund; the current series of the Northstar Trust: Northstar Income
and Growth Fund, Northstar High Total Return Fund, Northstar Growth +
Value Fund and Northstar International Value Fund; and any series that
may be established in the future (referred to herein collectively as
the "Funds" and individually as a "Fund").
II. MULTIPLE CLASS STRUCTURE
Each of the Funds continuously offers three classes of shares: "Class A
Shares," "Class B Shares" and "Class C Shares." The Northstar Growth
Fund also offers a fourth class of shares designated "Class I Shares."
In addition, prior to June 5, 1995, the Northstar Special Fund,
Northstar Growth Fund, Northstar Balance Sheet Opportunities Fund,
Northstar Government Securities Fund, Northstar Strategic Income Fund
and Northstar High Yield Fund each offered only one class of shares,
which is currently designated as "Class T shares." Class T shares are
no longer offered for sale by the Funds, except in connection with
reinvestment of dividends and other distributions, upon exchanges of
Class T shares of another Fund, and upon exchange of shares from the
Class T Account of The Cash Management Fund of Salomon Brothers
Investment Series (the "Money Market Portfolio").
Shares of each class of a Fund shall represent an equal pro rata
interest in such Fund and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions,
except that: (a) each class shall have a different designation; (b)
each class shall bear any Class Expenses, as defined in Section C
below; and (c) each class shall have exclusive voting rights on any
matter submitted to shareholders that relates solely to its
distribution arrangement and each class shall have separate voting
rights on any matter submitted to
<PAGE>
shareholders in which the interests of one class differ from the
interests of any other class. In addition, Class A, Class B, Class C,
Class I and Class T shares shall have the features described below.
A. Sales Charge Structure
(1) Class A Shares. Class A shares of a Fund shall be
offered at net asset value plus an initial sales
charge. The front-end sales charge shall be in such
amount as is disclosed in the Funds' prospectus or
supplements thereto and shall be subject to
reductions for larger purchases and such waivers or
reductions as are disclosed in the Funds' prospectus
or supplements thereto. Class A shares generally
shall not be subject to a contingent deferred sales
charge; however, a contingent deferred sales charge
in such amount as may be described in the Funds'
prospectus or supplements thereto may be imposed on
redemptions of Class A shares acquired in a purchase
of over a million dollars that are redeemed within 18
months of their purchase. Additional contingent
deferred sales charges may be imposed in such other
cases as the Board may approve and as are disclosed
in the Funds' prospectus or supplements thereto.
(2) Class B Shares. Class B shares of a Fund shall be
offered at net asset value without the imposition of
an initial sales charge. A contingent deferred sales
charge in such amount as is described in the Funds'
prospectus or supplements thereto shall be imposed on
Class B shares, subject to such waivers or reductions
as are disclosed in the Funds' prospectus or
supplements thereto.
(3) Class C Shares. Class C shares of a Fund shall be
offered at net asset value without the imposition of
a sales charge at the time of purchase. A contingent
deferred sales charge in such amount as is described
in the Funds' prospectus or supplements thereto shall
be imposed on redemptions of Class C shares made
within one year from the first day of the month after
purchase, subject to waivers or reductions as are
disclosed in the Funds' prospectus or supplements
thereto.
(4) Class I Shares. Class I shares are offered to
certain institutional investors without the
- 2 -
<PAGE>
imposition of an initial sales charge or a
contingent deferred sales charge.
(5) Class T Shares. Class T shares are no longer offered
for sale by the Funds but may be obtained pursuant to
the methods described above. A contingent deferred
sales charge in such amount as is described in the
Funds' prospectus or supplements thereto shall be
imposed on redemptions of Class T shares made within
four years after their purchase, subject to waivers
or reductions as are disclosed in the Funds'
prospectus or supplements thereto.
B. Service and Distribution Plans
Each Fund has adopted a 12b-1 plan for each class of shares of
that Fund (other than Class I Shares of the Northstar Growth
Fund) with the following terms:
(1) Class A Shares. Class A shares of each Fund, shall
pay Northstar Distributors, Inc. (the "Underwriter")
0.25% annually of the average daily net assets of
each Fund's Class A shares for service activities, as
defined in the rules of the National Association of
Securities Dealers, and 0.05% annually of the average
daily net assets of each Fund's Class A shares for
distribution activities.
(2) Class B Shares. Class B shares of each Fund, shall
pay the Underwriter 0.25% annually of the average
daily net assets of each Fund's Class B shares for
service activities, as defined in the rules of the
National Association of Securities Dealers, and 0.75%
annually of the average daily net assets of each
Fund's Class B shares for distribution activities.
(3) Class C Shares. Class C shares of each Fund shall pay
the Underwriter 0.25% annually of the average daily
net assets of each Fund's Class C shares for service
activities, as defined in the rules of the National
Association of Securities Dealers, and 0.75% annually
of the average daily net assets of each Fund's Class
C shares for distribution activities.
(4) Class T Shares. Class T shares of the Northstar
Growth Fund, Northstar Special Fund and Northstar
- 3 -
<PAGE>
Strategic Income Fund shall pay the Underwriter 0.95%
annually of the average daily net assets of those
Funds' Class T shares; Class T shares of the
Northstar Balance Sheet Fund shall pay the
Underwriter 0.75% annually of the average daily net
assets of that Fund's Class T shares; and the
Northstar Government Securities Fund and Northstar
High Yield Fund shall pay 0.65% of the average daily
net assets of those Funds' Class T shares. In each
case, 0.25% of the average daily net assets of each
Fund's Class T shares, which is paid annually to the
Underwriter pursuant to the 12b-1 plans, shall be
allocated to pay for service activities, as defined
in the rules of the National Association of
Securities Dealers, with the remainder allocated
toward payment for distribution activities.
C. Allocation of Income and Expenses
(1) The gross income of each Fund shall, generally, be
allocated to each class on the basis of net assets.
To the extent practicable, certain expenses (other
than Class Expenses as defined below which shall be
allocated more specifically) shall be subtracted from
the gross income on the basis of the net assets of
each class of each Fund. These expenses include:
(a) Expenses incurred by each Trust (for
example, fees of Trustees, auditors and
legal counsel) not attributable to a
particular Fund or to a particular class of
shares of a Fund ("Trust Expenses"); and
(b) Expenses incurred by a Fund not attributable
to any particular class of the Fund's shares
(for example, advisory fees, custodial fees,
or other expenses relating to the management
of the Fund's assets) ("Fund Expenses").
(2) Expenses attributable to a particular class ("Class
Expenses") shall be limited to: (i) payments made
pursuant to a 12b-1 plan; (ii) transfer agency fees
and expenses, including any expenses of
broker-dealers and other third parties providing
shareholder services to shareholders of a specific
class; (iii) printing and postage expenses related to
preparing and distributing materials such as
shareholder reports,
- 4 -
<PAGE>
prospectuses and proxies to current shareholders of a
specific class; (iv) Blue Sky registration fees
incurred by a class; (v) SEC registration fees
incurred by a class; (vi) the expense of
administrative personnel and services to support the
shareholders of a specific class; (vii) litigation or
other legal expenses relating solely to one class;
and (viii) Trustees' fees incurred as a result of
issues relating to one class. Expenses in category
(i) and (ii) above must be allocated to the class for
which such expenses are incurred. All other "Class
Expenses" listed in categories (iii)-(viii) above may
be allocated to a class but only if the President and
Treasurer have determined, subject to Board approval
or ratification, which of such categories of expenses
will be treated as Class Expenses, consistent with
applicable legal principles under the Act and the
Internal Revenue Code of 1986, as amended.
Therefore, expenses of a Fund shall be apportioned to
each class of shares depending on the nature of the
expense item. Trust Expenses and Fund Expenses will
be allocated among the classes of shares based on
their relative net asset values. Approved Class
Expenses shall be allocated to the particular class
to which they are attributable.
In the event a particular expense is no longer
reasonably allocable by class or to a particular
class, it shall be treated as a Trust Expense or Fund
Expense, and in the event a Trust Expense or Fund
Expense becomes allocable at a different level,
including as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and
to approval or ratification by the Board of Trustees.
The initial determination of expenses that will be
allocated as Class Expenses and any subsequent
changes thereto shall be reviewed by the Board of
Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons," as
defined in the 1940 Act.
D. Exchange Privileges. Shareholders may exchange shares
of a Fund for the same class of shares of another Fund
or for shares of the Money Market Portfolio except that
Class I Shares of the Growth Fund do not provide for
any exchange privileges.
- 5 -
<PAGE>
Shareholders of a class who exchange shares of a Fund for
shares of the Money Market Portfolio may only exchange shares
of the Money Market Portfolio for shares of another Fund in
the same class as the shareholder originally held. Exchanges
are effected at net asset value per share next computed
following receipt of a properly executed exchange request,
without a sales charge, provided, however, that in the case of
a exchanges into Class A shares of a Fund after a direct
purchase into the Money Market Portfolio, the applicable sales
charge shall be imposed. Collection of the contingent deferred
sales charge shall be deferred on shares subject to a charge
that are exchanged for shares of the same class of another
Fund, or converted to shares of the Money Market Portfolio.
Under these circumstances, the combined holding period of
shares in each Fund or in a Fund and the Money Market
Portfolio, shall be used to calculate the conversion period
discussed below, if applicable, and to determine the deferred
sales charge due upon redemption. Each Fund reserves the right
to terminate or modify its exchange privileges at any time.
E. Conversion Features. Class B and Class T shares
automatically convert to Class A shares after eight
years from purchase in the case of Class B shares, and
on the later of May 31, 1998 or eight years after
purchase in the case of Class T shares.
For purposes of conversion to Class A shares, shares purchased
through the reinvestment of dividends and distributions paid
in respect of Class B or Class T shares in a shareholder's
Fund account will be considered to be held in a separate
subaccount. Each time any Class B or Class T shares in the
shareholder's Fund account (other than those in the
subaccount) convert to Class A, an equal pro rata portion of
the Class B or Class T shares in the subaccount will also
convert to Class A.
Shares shall be converted at the relative net asset values of
the two classes without the imposition of a sales charge, fee
or other charge. If the amount of Class A 12b-1 expenses of
any Fund is increased materially without the approval of the
Class B and Class T shareholders, any conversion will only
take place in a manner permitted by Rule 18f-3.
F. Waiver or Reimbursement of Expenses. Expenses may be
waived or reimbursed by any adviser, by the Underwriter
- 6 -
<PAGE>
or any other provider of services to the Funds without
the prior approval of the Board of Trustees.
III. BOARD REVIEW
A. Initial Approval
The Board of Trustees, including a majority of the Trustees
who are not "interested persons" of the Funds and the Trusts
as defined in the 1940 Act, at a meeting held October 29,
1996, initially approved the Plan based on a determination
that the Plan, including the expense allocation, is in the
best interests of each class and Fund individually and of the
Trusts. Their determination was based on their review of
information furnished to them which they deemed reasonably
necessary and sufficient to evaluate the Plan.
B. Approval of Amendments
The Plan may not be amended materially unless the Board of
Trustees, including a majority of the Trustees who are not
"interested persons" of the Funds and the Trusts as defined in
the 1940 Act, have found that the proposed amendment,
including any proposed related expense allocation, is in the
best interests of each class and Fund individually and of the
Trusts. Such finding shall be based on information requested
by the Board and furnished to them which the Board deems
reasonably necessary to evaluate the proposed amendment.
C. Periodic Review
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant
to such schedule, as they may determine consistent with
applicable legal requirements.
IV. MISCELLANEOUS
A. Limitation of Liability
The Board of Trustees and the shareholders of each Fund shall
not be liable for any obligations of the Trusts or any Fund
under this Plan, and the Underwriter or any other person, in
asserting any rights or claims under this Plan, shall look
only to the assets and property
- 7 -
<PAGE>
of the Trusts or such Funds in settlement of such right or
claim, and not to such Trustees or shareholders.
IN WITNESS WHEREOF, the Trusts, on behalf of the Funds, have adopted
this Multiple Class Plan as of the 29 day of October, 1996, to be effective
10/29, 1996.
THE NORTHSTAR FUNDS
NORTHSTAR TRUST
By: /s/ AGNES MULLADY
Title: Vice President and
Treasurer
- 8 -
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<SHARES-REINVESTED> 101
<NET-CHANGE-IN-ASSETS> 26792
<ACCUMULATED-NII-PRIOR> 364
<ACCUMULATED-GAINS-PRIOR> (1805)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 2482
<AVERAGE-NET-ASSETS> 206529
<PER-SHARE-NAV-BEGIN> 10.83
<PER-SHARE-NII> .24
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<EXPENSE-RATIO> 2.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000911294
<NAME> NORTHSTAR TRUST
<SERIES>
<NUMBER> 001
<NAME> HIGH TOTAL RETURN FUND A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 547193
<INVESTMENTS-AT-VALUE> 556278
<RECEIVABLES> 17531
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 573846
<PAYABLE-FOR-SECURITIES> 2450
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2397
<TOTAL-LIABILITIES> 4847
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 559243
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 671
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9085
<NET-ASSETS> 568999
<DIVIDEND-INCOME> 158
<INTEREST-INCOME> 40786
<OTHER-INCOME> 0
<EXPENSES-NET> 7124
<NET-INVESTMENT-INCOME> 33820
<REALIZED-GAINS-CURRENT> 6943
<APPREC-INCREASE-CURRENT> 12167
<NET-CHANGE-FROM-OPS> 52930
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13178)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19104
<NUMBER-OF-SHARES-REDEEMED> (4969)
<SHARES-REINVESTED> 1199
<NET-CHANGE-IN-ASSETS> 373075
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (4419)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 4484
<AVERAGE-NET-ASSETS> 359778
<PER-SHARE-NAV-BEGIN> 4.48
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000911294
<NAME> NORTHSTAR TRUST
<SERIES>
<NUMBER> 002
<NAME> HIGH TOTAL RETURN FUND B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 547193
<INVESTMENTS-AT-VALUE> 556278
<RECEIVABLES> 17531
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 573846
<PAYABLE-FOR-SECURITIES> 2450
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2397
<TOTAL-LIABILITIES> 4847
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 559243
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 671
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9085
<NET-ASSETS> 568999
<DIVIDEND-INCOME> 158
<INTEREST-INCOME> 40786
<OTHER-INCOME> 0
<EXPENSES-NET> 7124
<NET-INVESTMENT-INCOME> 33820
<REALIZED-GAINS-CURRENT> 6943
<APPREC-INCREASE-CURRENT> 12167
<NET-CHANGE-FROM-OPS> 52930
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (19779)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 53275
<NUMBER-OF-SHARES-REDEEMED> (3380)
<SHARES-REINVESTED> 1255
<NET-CHANGE-IN-ASSETS> 373075
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (4419)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<AVERAGE-NET-ASSETS> 359778
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000911294
<NAME> NORTHSTAR TRUST
<SERIES>
<NUMBER> 003
<NAME> HIGH TOTAL RETURN FUND C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 547193
<INVESTMENTS-AT-VALUE> 556278
<RECEIVABLES> 17531
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 573846
<PAYABLE-FOR-SECURITIES> 2450
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 4847
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 559243
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 671
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9085
<NET-ASSETS> 568999
<DIVIDEND-INCOME> 158
<INTEREST-INCOME> 40786
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<EXPENSES-NET> 7124
<NET-INVESTMENT-INCOME> 33820
<REALIZED-GAINS-CURRENT> 6943
<APPREC-INCREASE-CURRENT> 12167
<NET-CHANGE-FROM-OPS> 52930
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2906)
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9644
<NUMBER-OF-SHARES-REDEEMED> (944)
<SHARES-REINVESTED> 196
<NET-CHANGE-IN-ASSETS> 373075
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (4419)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<AVERAGE-NET-ASSETS> 359778
<PER-SHARE-NAV-BEGIN> 4.49
<PER-SHARE-NII> .43
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<PER-SHARE-DIVIDEND> (.45)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.79
<EXPENSE-RATIO> 2.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
