BRANDES INTERNATIONAL FUND
12750 High Bluff Drive
San Diego, California 92130
(800) 237-7119
March 6, 1997
Dear Shareholder:
The Board of Trustees of Brandes Investment Trust ("Brandes Trust") has
recently reviewed and unanimously endorsed a proposal for the reorganization of
Brandes International Fund ("Brandes Fund"), a separate series of Brandes Trust,
which they have determined to be in the best interests of its shareholders. This
proposal calls for acquisition of Brandes Fund's assets by Northstar
International Value Fund ("Northstar Fund"), a newly formed, separately managed
series of Northstar Trust. Northstar Fund has the same investment objective and
substantially identical investment policies as Brandes Fund.
The Board has therefore called a Special Meeting of Shareholders to be held
on April 8, 1997 to consider this transaction. WE STRONGLY INVITE YOUR
PARTICIPATION BY ASKING YOU TO REVIEW, COMPLETE AND RETURN YOUR PROXY AS SOON AS
POSSIBLE.
As a result of this transaction, Brandes Fund would be combined with
Northstar Fund and you would become a shareholder of Northstar Fund. You would
own the same class of shares of Northstar Fund as you currently own of Brandes
Fund, and the aggregate net asset value of your shares of Brandes Fund will be
equal to the aggregate net asset value of the shares of Northstar Fund that you
will receive as a result of the reorganization. No sales charge will be imposed
in the transaction, and the closing of the transaction will be conditioned upon
receiving an opinion of counsel to the effect that the transaction will qualify
as a tax-free reorganization for federal income tax purposes.
Northstar Fund, like Brandes Fund, seeks long-term capital appreciation by
primarily investing in equity securities of foreign issuers with market
capitalizations greater than $1 billion. Brandes Investment Partners, L.P.,
currently the investment adviser to Brandes Fund, will serve as sub-adviser to
Northstar Fund following the transaction. Thus, it is expected that consistency
of portfolio management will be maintained following the transaction.
The Trustees of Brandes Trust recommend that the shareholders of Brandes
Fund approve the reorganization. The Trustees believe the reorganization would
benefit Brandes Fund and its shareholders by enhancing its capacity to attract
and retain investors. In making their determination, the Trustees reviewed
several factors, including the qualifications and capabilities of the service
providers of the Northstar family of mutual funds. If, as expected, Northstar
Distributors, Inc., the distributor of Northstar Fund, is able to distribute
Northstar Fund shares successfully, growth in assets would make possible the
realization of economies of scale and attendant savings in costs to Northstar
Fund and its shareholders. Of course, achievement of these goals cannot be
assured. In addition, following the reorganization, you will be able to freely
exchange your Northstar Fund shares for shares of the same class of 9 other
funds in the Northstar family representing a wide range of investment objectives
and policies.
Detailed information about the proposed transaction and the reasons for it
are contained in the enclosed materials. Please exercise your right to vote by
completing, dating and signing the enclosed proxy card. A self-addressed,
postage-paid envelope has been enclosed for your convenience. It is very
important that you vote and that your voting instructions be received no later
than April 7, 1997.
It may be necessary to retain an outside firm that specializes in proxy
solicitation to provide assistance in connection with the solicitation of
proxies. If we have not received your vote as the Special Meeting of
Shareholders approaches, you may receive a telephone call from the proxy
solicitation firm. We hope that the telephone call does not inconvenience you.
NOTE: You may receive more than one proxy package if you hold Brandes Fund
shares in more than one account. You must return separate proxy cards for
separate holdings. We have provided postage-paid return envelopes for each.
Sincerely,
/s/ Barry P. O'Neil
BARRY P. O'NEIL
PRESIDENT
<PAGE>
BRANDES INTERNATIONAL FUND
A SERIES OF BRANDES INVESTMENT TRUST
12750 High Bluff Drive
San Diego, California 92130
(800) 237-7119
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 8, 1997
March 6, 1997
TO THE SHAREHOLDERS OF
BRANDES INTERNATIONAL FUND
(A SERIES OF BRANDES INVESTMENT TRUST):
NOTICE IS HEREBY GIVEN that a Special Meeting of
Shareholders (the "Meeting") of Brandes International Fund
("Brandes Fund"), a series of Brandes Investment Trust, will be
held at the offices of Brandes Fund at 12750 High Bluff Drive,
San Diego, California, at 10:00 a.m., Pacific time, on April 8,
1997, for the following purposes:
1. To consider and vote on a proposed Agreement and Plan of
Reorganization providing for (a) the acquisition of all
the assets of Brandes Fund by Northstar International
Value Fund ("Northstar Fund"), a newly formed,
separately managed series of Northstar Trust, in
exchange for shares of beneficial interest of Northstar
Fund, and (b) the liquidation of Brandes Fund and the
pro rata distribution of its holdings of Northstar Fund
shares to its shareholders.
2. To transact such other business as may properly come
before the Meeting, or any adjournment or adjournments
thereof.
The Board of Trustees has fixed the close of business on
February 14, 1997 as the record date for determination of
shareholders entitled to notice of, and to vote at, the Meeting.
EACH SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING
IN PERSON IS REQUESTED TO DATE, FILL IN, SIGN AND RETURN
PROMPTLY THE ENCLOSED FORM OF PROXY IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
By order of the Board of
Trustees,
/s/ Glenn R. Carlson
GLENN R. CARLSON
SECRETARY
YOUR PROMPT ATTENTION TO THE ENCLOSED FORM OF PROXY WILL
HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and may help avoid the time and expense involved in validating your vote if
you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: sign your name exactly as it appears in the
registration on the proxy card.
2. JOINT ACCOUNTS: either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration on the proxy
card.
3. ALL OTHER ACCOUNTS: the capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
<TABLE>
REGISTRATION VALID SIGNATURE
<S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp................................................. ABC Corp. John Doe, Treasurer
(2) ABC Corp................................................. John Doe, Treasurer
(3) ABC Corp. c/o John Doe................................... John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan............................ John Doe, Trustee
PARTNERSHIP ACCOUNTS
(1) The XYZ Partnership...................................... Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership..................... Jane B. Smith, General Partner
TRUST ACCOUNTS
(1) ABC Trust................................................ Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78...................... Jane B. Doe, Trustee
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr., John B. Smith
UGMA/UTMA...............................................
(2) Estate of John B. Smith.................................. John B. Smith, Jr., Executor
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
RELATING TO THE ACQUISITION OF THE ASSETS OF
BRANDES INTERNATIONAL FUND
A SERIES OF BRANDES INVESTMENT TRUST
12750 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
TELEPHONE: (619) 755-0239
BY AND IN EXCHANGE FOR SHARES OF
NORTHSTAR INTERNATIONAL VALUE FUND
A SERIES OF NORTHSTAR TRUST
TWO PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
TELEPHONE: (800) 595-7827
This Proxy Statement/Prospectus is being furnished to shareholders of
Brandes International Fund ("Brandes Fund"), a separate series of Brandes
Investment Trust ("Brandes Trust"), in connection with a proposed reorganization
(the "Reorganization") in which all of the assets and liabilities of Brandes
Fund would be acquired by Northstar International Value Fund ("Northstar Fund"),
a newly formed separate series of the Northstar Trust, in exchange for shares of
Northstar Fund. The shares of Northstar Fund thereby received would then be
distributed to shareholders of Brandes Fund, and Brandes Fund would be
terminated. As a result of the Reorganization, each shareholder of Brandes Fund
would receive that number of full and fractional shares of the corresponding
class of shares of Northstar Fund having an aggregate net asset value equal to
the aggregate net asset value of such shareholder's shares of Brandes Fund held
as of the date of the Reorganization. No sales charge will be imposed on the
transaction, and, following the Reorganization, shareholders will own the same
class of shares of Northstar Fund as they held of Brandes Fund.
Northstar Trust is an open-end management investment company that issues
its shares of beneficial interest in separate portfolios or series, each with
its own investment objective or objectives and policies. The investment
objective of Northstar International Value Fund, a separate diversified
portfolio of Northstar Trust, is long-term capital appreciation. Northstar Fund
seeks to achieve this objective by primarily investing in equity securities of
foreign issuers with market capitalizations greater than $1 billion. There can
be no assurance that the Northstar Fund's investment objective will be achieved.
The investment objective and policies of Northstar Fund (and consequently,
the risks of investing in it) are substantially identical to those of Brandes
Fund. The investment restrictions of the Northstar Fund are slightly different
from those of the Brandes Fund. For a comparison of the investment objectives,
policies and restrictions of the Brandes Fund and Northstar Fund (collectively
referred to as "the Funds" or "each Fund"), see "Investment Objectives, Policies
and Restrictions of the Brandes and Northstar Funds" in this Proxy
Statement/Prospectus. Brandes Investment Partners, L.P. ("Brandes") will serve
as the investment sub-adviser for Northstar Fund and will manage its assets.
This Proxy Statement/Prospectus, which should be retained for future
reference, sets forth concisely the information about Northstar Fund that a
prospective investor should know before investing. Attached hereto as Exhibit B
is the prospectus of Northstar Fund, dated February 28, 1997, which prospectus
is incorporated herein by reference. A Statement of Additional Information for
Northstar Fund, dated February 28, 1997, has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated herein by reference. A
Prospectus and Statement of Additional Information for Brandes Fund dated
February 28, 1997 have been filed with the SEC and are incorporated herein by
reference. A Statement of Additional Information dated March 6, 1997, containing
additional information about the Reorganization and the parties thereto, has
been filed with the SEC and is incorporated herein by reference. Copies of the
referenced documents are available upon request and without charge by writing to
Northstar Trust at the address above or by calling the number listed above.
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 PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is March 6, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary of the Proposed Reorganization................................................................................. 2
Investment Advisers, Administrators and Distributors of Brandes and Northstar Funds.................................... 3
Investment Objectives, Policies and Restrictions of Brandes and Northstar Funds........................................ 3
Principal Risk Factors................................................................................................. 4
Fees and Expenses of Brandes and Northstar Funds....................................................................... 5
Purchase, Redemption and Exchange Procedures of Brandes and Northstar Funds............................................ 8
Dividend Policies of Brandes and Northstar Funds....................................................................... 9
Information about the Reorganization................................................................................... 9
Comparative Information on Shareholder Rights.......................................................................... 12
Additional Information about Northstar Fund and Brandes Fund........................................................... 12
Voting Information..................................................................................................... 12
Exhibit A -- Agreement and Plan of Reorganization
Exhibit B -- Prospectus of Northstar International Value Fund
</TABLE>
For detailed information about Northstar International Value Fund, see the
Northstar International Value Fund Prospectus dated February 28, 1997, included
herein.
<PAGE>
SUMMARY OF THE PROPOSED REORGANIZATION
The Board of Trustees of Brandes Trust, including the Trustees who are not
"interested persons" of Brandes Trust (the "Independent Trustees"), as defined
in the Investment Company Act of 1940, as amended (the "1940 Act"), has
unanimously approved the Plan providing for the acquisition of all of the assets
of Brandes Fund, a separate series of Brandes Trust, by Northstar Fund, a
separate series of Northstar Trust, in exchange for shares of Northstar Fund and
the assumption by Northstar Fund of the liabilities of Brandes Fund. The
aggregate net asset value of the Class A and Class C shares of Northstar Fund
issued in the exchange will equal the aggregate net asset value of Brandes
Fund's Class A and Class C shares then outstanding. In connection with the
Reorganization, Class A and Class C shares of Northstar Fund will be distributed
to shareholders of the corresponding classes of Brandes Fund, and Brandes Fund
will be terminated. As a result of the Reorganization, each shareholder of
Brandes Fund will cease to be a shareholder of Brandes Fund and will receive
that number of full and fractional shares of Northstar Fund having an aggregate
net asset value equal to the aggregate net asset value of such shareholder's
shares of Brandes Fund. No sales charge will be imposed on the transaction, and,
following the Reorganization, shareholders will own the same class of shares of
Northstar Fund as they previously held of Brandes Fund. Of course, Brandes Fund
shareholders remain free to redeem their shares any time before or after the
Reorganization. As a condition to closing, Brandes Fund and Northstar Fund will
obtain an opinion of Dechert Price & Rhoads to the effect that the
Reorganization will qualify as a tax-free reorganization for Federal income tax
purposes. See "Information about the Reorganization."
Northstar Fund and Brandes Fund have substantially similar investment
objectives and policies. The risks of investing in the two Funds are
substantially the same, although the investment restrictions of Northstar Fund
are slightly different from the investment restrictions of Brandes Fund. The
principal risk associated with the Northstar Fund and the Brandes Fund is the
risk of investment in foreign securities. The slight differences in investment
restrictions are not expected to affect the manner in which Brandes will manage
the assets of Northstar Fund compared to Brandes Fund. See "Principal Risk
Factors" below. Each Fund has substantially similar distribution, purchase,
exchange and redemption procedures.
For the reasons set forth below, the Board of Trustees of Brandes Trust,
including all of the Independent Trustees, has unanimously concluded that the
Reorganization will be in the best interests of the Class A and Class C
shareholders of Brandes Fund and that the interests of existing Class A and
Class C shareholders of Brandes Fund will not be diluted as a result of the
transactions contemplated by the Reorganization. The Board of Trustees of
Brandes Trust therefore has submitted the Reorganization for approval by the
Class A and Class C shareholders of Brandes Fund at a Special Meeting of
Shareholders to be held on April 8, 1997 (the "Meeting"). Approval of the
Reorganization with respect to Brandes Fund requires the vote of a majority of
the outstanding voting securities of the Class A shares of Brandes Fund and a
majority of the outstanding voting securities of the Class C shares of Brandes
Fund. The Reorganization will not be effected unless the requisite approval is
provided by both Class A and Class C shareholders of Brandes Fund. See "Voting
Information."
The Trustees of Brandes Trust have approved the Reorganization because they
believe it would benefit shareholders of Brandes Fund through Northstar Fund's
expected greater ability to attract and retain investors. In that connection,
the Trustees considered the fact that Brandes will manage the investments of the
Northstar Fund in the same manner as it has managed the assets of the Brandes
Fund. The Trustees also reviewed and considered the capabilities of the other
Northstar service providers to provide administrative and distribution services
to Northstar Fund. As discussed below, the Northstar service providers manage
and distribute a family of ten mutual fund portfolios with assets of
approximately $1,950,000,000 as of February 28, 1997. As members of this family
of funds, shareholders of Northstar Fund would enjoy all the same services and
privileges as other shareholders of Northstar Trust, including the opportunity
to exchange into funds with a wide variety of investment objectives and
policies.
The Trustees of Brandes Trust also considered the distribution capabilities
of Northstar Distributors, Inc. ("Northstar Distributors"), which currently has
in place a network of 307 dealers that have signed Dealer Agreements with
Northstar Distributors. These dealers include some of the largest national
broker-dealer firms as well as regionally based firms. If, as anticipated,
Northstar Distributors is able to distribute Northstar Fund shares successfully,
growth in assets should make possible the realization of economies of scale and
attendant savings in costs to Northstar Fund and its shareholders. Of course,
achievement of these goals cannot be assured.
The Trustees of Brandes Trust also took into account a variety of other
factors discussed below in greater detail, including the benefits of certain fee
arrangements with respect to the Northstar Fund. See "Information About the
Reorganization."
THE BOARD OF TRUSTEES OF BRANDES TRUST, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS APPROVAL OF THE PLAN OF REORGANIZATION.
2
<PAGE>
INVESTMENT ADVISERS, ADMINISTRATORS AND DISTRIBUTORS
OF BRANDES AND NORTHSTAR FUNDS
The investment adviser to Brandes Trust is Brandes Investment Partners,
L.P. ("Brandes"), whose address is 12750 High Bluff Drive, San Diego, California
92130. Brandes' general partner is Brandes Investment Partners, Inc.; Charles H.
Brandes, who owns a controlling interest in the general partner's common stock,
serves as one of the managing directors of Brandes. Investment Company
Administration Corporation ("ICAC"), whose address is 4455 East Camelback Road,
Suite 261E, Phoenix, Arizona 85018, serves as the administrator of Brandes
Trust. Worldwide Value Distributors, Inc. ("Worldwide"), an affiliate of
Brandes, whose address is 12750 High Bluff Drive, San Diego, California 92130,
is Brandes Trust's distributor.
Northstar Investment Management Corporation ("Northstar"), whose address is
Two Pickwick Plaza, Greenwich, Connecticut 06830, is the investment adviser to
Northstar Fund, and Brandes will be the investment sub-adviser. As the sub-
adviser, Brandes will manage Northstar Fund's investments in the same manner as
it manages Brandes Fund's investments. Northstar Administrators Corporation
("NAC"), an affiliate of Northstar, whose address is Two Pickwick Plaza,
Greenwich, Connecticut 06830, furnishes certain administrative, compliance and
accounting services to Northstar Fund. Northstar Distributors, also an affiliate
of Northstar, whose address is Two Pickwick Plaza, Greenwich, Connecticut 06830,
serves as principal underwriter of the shares of the Northstar Fund, conducting
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 through
investment dealers.
Northstar and its affiliates are indirect, majority owned subsidiaries of
ReliaStar Financial Corporation ("ReliaStar"). ReliaStar's address is 20
Washington Avenue South, Minneapolis, Minnesota 55401. Combined minority
interests of Northstar held by members of its senior management currently equal
20%. ReliaStar is a publicly traded holding company whose other subsidiaries
specialize in the life and health insurance business. Through ReliaStar Life
Insurance Company and other subsidiaries, ReliaStar issues and distributes
individual life insurance, annuities and mutual funds, group life and health
insurance and life and health reinsurance, and provides related investment
management services.
Following the Reorganization, Brandes will serve as the sub-adviser to
Northstar Fund pursuant to a Subadvisory Agreement between Northstar and
Brandes. Northstar will be responsible for overseeing the investment management
services provided by Brandes, and will assume all cost and expenses of the
subadvisory arrangement.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
OF BRANDES AND NORTHSTAR FUNDS
The investment objectives and policies of Northstar Fund and Brandes Fund
(and consequently, the attendant risks of investing in either Northstar Fund or
Brandes Fund) are substantially identical. Furthermore, Brandes will serve as
sub-adviser to Northstar Fund following the Reorganization, with full power to
make investment decisions for Northstar Fund. Brandes will employ the same
investment management style on behalf of Northstar Fund as was followed by
Brandes as investment adviser to Brandes Fund.
Each Fund has adopted investment restrictions regarding issuer and industry
diversification, investment in commodities, investment in the securities of
other investment companies and other matters required to be stated in its
registration statement under the 1940 Act. The investment restrictions of
Northstar Fund are substantially similar to those of Brandes Fund, except that
the Board of Trustees of the Northstar Fund did not adopt certain of Brandes
Fund's investment restrictions that are not required under the 1940 Act.
Furthermore, certain of the Brandes Fund's fundamental investment restrictions
(which can be changed only with shareholders approval) are non-fundamental
investment restrictions of the Northstar Fund (which can be changed by its Board
of Trustees without shareholder approval).
The investment restrictions applicable to Brandes Fund that were not
adopted by the Board of Trustees of Northstar Fund include restrictions
regarding investments in oil, gas or mineral leases, warrants and the securities
of unseasoned issuers, which were once required by the laws of certain states
but are no longer required. The slight differences in investment restrictions
are not expected to affect the manner in which Brandes will manage the assets of
Northstar Fund compared to Brandes Fund. For additional information on each
Fund's investment restrictions, see its respective Statement of Additional
Information.
The following is a general description of the investment objectives and
policies of Northstar Fund and Brandes Fund. This discussion is qualified in its
entirety by reference to the more detailed description set forth in the
accompanying Prospectus of Northstar Fund. The investment objective of each of
Northstar Fund and Brandes Fund is long-term capital appreciation. Each Fund
invests primarily in equity securities of foreign issuers with market
capitalizations greater than $1 billion.
3
<PAGE>
Each Fund may invest up to 25% of its total assets in small capitalization
companies (i.e., companies with market capitalization of $1 billion or less).
Under normal circumstances, each Fund will invest at least 65% of its total
assets in equity securities of issuers located in at least three countries other
than the United States. Countries in which each Fund may invest include, but are
not limited to, the nations of Western Europe, North and South America,
Australia and Asia. Equity securities include common stocks, preferred stocks
and securities convertible into common stocks. It is anticipated that securities
generally will be purchased in the form of common stock, American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") or Global Depositary
Receipts ("GDRs"). ADRs, EDRs and GDRs, which may be sponsored or unsponsored,
are receipts typically issued by a bank or trust company evidencing ownership of
the underlying foreign securities. The issuers of securities underlying
unsponsored ADRs, EDRs and GDRs are not obligated to disclose material
information in the United States and, accordingly, there may not be a
correlation between such information and the market value of such Depositary
Receipts.
Each Fund may invest up to 25% of its assets in securities of companies
located in countries with emerging securities markets. Emerging markets are the
capital markets of any country that in the opinion of Brandes is generally
considered a developing country by the international financial community.
In seeking out foreign securities for purchase by each Fund, Brandes does
not attempt to match the security allocations of foreign stock market indices.
Therefore each Fund's country weightings may differ significantly from country
weightings found in published foreign stock indices. For example, Brandes may
choose not to invest a Fund's assets in a country whose stock market, at any
given time, may comprise a large portion of a published foreign stock market
index. At the same time, Brandes may invest a Fund's assets in countries whose
representation in such an index may be small or non-existent. Brandes selects
stocks for each Fund based on their individual merits and not necessarily on
their geographic locations.
Each Fund may, to similar degrees and as further discussed in the
accompanying prospectus of the Northstar Fund, engage in the following other
investment instruments and techniques: short-term investments, repurchase
agreements, U.S. government securities, when-issued securities, securities
lending, options, illiquid and restricted securities and short sales against the
box. For additional information on these investment instruments and techniques,
see "Other Investment Techniques" in the accompanying prospectus of Northstar
Fund.
There can be no assurance that either Brandes Fund or Northstar Fund will
achieve its stated investment objective. See "Principal Risk Factors" below.
PRINCIPAL RISK FACTORS
Because of similarities in investment objectives, policies and portfolio
management style, the risks of investing in Northstar Fund are substantially
similar to the risks of investing in Brandes Fund. For a further discussion of
the investment objectives, policies and restrictions applicable to Northstar
Fund and Brandes Fund, and the risks of investing in each Fund, see "Comparison
of Investment Objectives, Policies and Restrictions" herein and the discussions
under "Investment Considerations and Risk Factors" in the accompanying
prospectus of the Northstar Fund.
Both Brandes Fund and Northstar Fund invest primarily in the equity
securities of foreign issuers. Equity securities can over time rise and fall in
value, often based on factors unrelated to the value of the issuer of the
securities, and such fluctuations can be pronounced. Changes in the value of a
Fund's investments will result in changes in the value of the Fund's shares and
thus its total return to investors.
The securities of smaller companies in which each Fund may invest may be
subject to more abrupt or erratic market movements than securities of larger,
more established companies, because the securities of smaller companies
typically are traded in lower volume and the issuers typically are subject to a
greater degree to changes in earnings and prospects.
Investing in foreign securities involves special risks. These include the
risks of currency fluctuations, political or economic instability in the country
of issue and the possible imposition of exchange controls or other laws or
restrictions. Fluctuations in currency exchange rates can adversely or
positively affect the value of a Fund's shares, depending upon whether the
foreign currencies are depreciating or appreciating relative to the U.S. dollar.
In addition, securities prices in foreign markets are generally subject to
different economic, financial, political and social factors than are the prices
of securities in U.S. markets. With respect to some foreign countries there may
be the possibility of expropriation or confiscatory taxation, limitations on
liquidity of securities or political or economic developments which could affect
the foreign investments of each Fund.
4
<PAGE>
Further, securities of foreign issuers generally will not be registered
with the SEC, and such issuers will generally not be subject to the SEC's
reporting requirements. Accordingly, there is likely to be less publicly
available information concerning certain of the foreign issuers of securities
held by each Fund than is available concerning U.S. companies. Foreign companies
are also generally not subject to uniform accounting, auditing and financial
reporting standards or to practices and requirements comparable to those
applicable to U.S. companies. There may also be less government supervision and
regulation of foreign broker-dealers, financial institutions and listed
companies than exists in the U.S. These factors could make foreign investments,
especially those in developing countries, more volatile than domestic
investments.
Investing in emerging securities markets involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
market countries may have fixed or managed currencies that are not free-floating
against the U.S. dollar. Further, certain currencies may not be traded
internationally. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which a Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base, governmental controls and investment restrictions that are subject to
political change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries than in the U.S.
Emerging securities markets typically have substantially less volume than
U.S. markets, and securities in many of such markets are less liquid, and their
prices often are more volatile, than securities of comparable U.S. companies.
Such markets often have different clearance and settlement procedures for
securities transactions, and in some markets there have been times when
settlements have been unable to keep pace with the volume of transactions,
making it difficult to conduct transactions. Delays in settlement could result
in temporary periods when assets which a Fund desires to invest in emerging
markets may be uninvested. Settlement problems in emerging markets countries
also could cause a Fund to miss attractive investment opportunities.
Satisfactory custodial services may not be available in some emerging markets
countries, which may result in a Fund incurring additional costs and delays in
the transportation and custody of such securities.
FEES AND EXPENSES OF BRANDES AND NORTHSTAR FUNDS
ADVISORY AND ADMINISTRATION FEES. Brandes Fund currently pays Brandes an
investment advisory fee, which accrues daily and is paid monthly at an annual
rate of 1.00% of Brandes Fund's average daily net assets. Brandes Fund pays ICAC
an administrative fee for its services at the annual rate of 0.10% of the Fund's
average daily net assets, subject to a minimum of $60,000.
Under the terms of an investment advisory agreement between Northstar and
Northstar Trust, Northstar Trust has agreed to pay Northstar a monthly fee at
the annual rate of 1.00% of Northstar Fund's average daily net assets. Northstar
Fund pays NAC an administrative services fee, which is accrued daily and paid
monthly, at the annual rate of 0.10% of Northstar Fund's average net assets. NAC
also charges an annual account service fee of $5.00 for each account of
beneficial holders of shares in Northstar Fund for providing certain shareholder
services and assisting broker-dealers in servicing Fund accounts. After
Northstar Fund's net assets exceed $50 million, Brandes will receive from
Northstar, not Northstar Fund, a monthly fee for its services as sub-adviser to
Northstar Fund at an annual rate equal to 50% of the management fee Northstar
Fund pays Northstar.
From time to time, Northstar may waive receipt of its fees or agree to
limit certain expenses of the Fund. In this connection, Northstar, NAC and
Brandes have agreed to waive any management, administrative and sub-advisory
fees until the net assets of Northstar Fund exceed $50 million. Thereafter, if
the assets were to decrease below $50 million Northstar, NAC and Brandes may
determine again to waive some or all of their fees, although they are not
required to do so.
DISTRIBUTION AND SHAREHOLDER SERVICING FEES. Brandes Fund pays Worldwide a
monthly distribution fee pursuant to a distribution plan adopted by Brandes
Trust, at the annual rate of 0.25% of the average daily net assets of the Class
A Shares of Brandes Fund and 0.75% of the average daily net assets of the Class
C Shares of Brandes Fund. During the period they are in effect, the distribution
plan and related distribution contracts pertaining to each class of shares of
Brandes Fund obligate
5
<PAGE>
Brandes Fund to pay distribution fees to Worldwide as compensation for
Worldwide's distribution activities, not as reimbursement for specific expenses
incurred. Thus, even if Worldwide's distribution expenses exceed the
distribution fees, Brandes Fund will not be obligated to pay more than those
fees, and if Worldwide's distribution expenses are less than those fees,
Worldwide will retain its full fees and realize a profit. As of February 28,
1997, Worldwide's expenses under the distribution plan had exceeded its fees by
a total of $622,762.
Brandes Trust has also adopted a shareholder service plan with respect to
Brandes Fund, under which Brandes Fund reimburses Worldwide for shareholder
servicing expenses. Under the plan, Brandes Fund pays Worldwide a fee at the
annual rate of up to 0.10% of the average daily net assets of the Class A Shares
and up to 0.25% of the average daily net assets of the Class C Shares as
reimbursement for certain expenses actually incurred in connection with
shareholder services provided by Worldwide and for payments to investment
dealers, retirement plan administrators and others for the provision of such
services. These services include establishing and maintaining accounts and
records relating to clients who invest in Brandes Fund, responding to
shareholder inquiries, assisting shareholders in changing account options,
transmitting communications to shareholders and providing such other information
and assistance to shareholders as they may reasonably request.
Under the distribution plans adopted by Northstar Fund, Northstar Fund pays
Northstar Distributors 0.30% annually of the average daily net assets of the
Fund's Class A shares and 1.00% annually of the average daily net assets of the
Fund's Class B and Class C shares as compensation for distribution activities,
not as reimbursement for specific expenses incurred. Thus, even if Northstar
Distributor's distribution expenses exceed the distribution fees, Northstar Fund
will not be obligated to pay more than those fees, and if the fees exceed
Northstar Distributor's expenses in any year, Northstar Distributors will
realize a profit. Northstar Trust has not adopted a shareholder service plan
like the shareholder service plan adopted by Brandes Trust. Northstar Fund makes
provision for shareholder service fees out of its distribution plans.
The fees paid by Northstar Fund under its Class C distribution plan equal
the fees paid by Brandes Fund under its distribution and shareholder service
plans for Class C shares. With respect to Class A shares, Brandes Fund's fees
for distribution and shareholder services are 0.35% of average daily net assets
while Northstar Fund's comparable fees are 0.30% of average daily net assets.
TOTAL EXPENSES. For the fiscal year ended October 31, 1996, Brandes Fund
had total fees and expenses of 1.85% of the average net assets of Class A shares
and 2.50% of the average net assets of Class C shares. For the fiscal year ended
October 31, 1996, Brandes voluntarily agreed to reimburse Brandes Fund to ensure
that Brandes Fund's total operating expenses would not exceed 1.85% of average
net assets for Class A shares and 2.50% of average net assets for Class C
shares. In the absence of this reimbursement, total fees and expenses would have
been 2.82% of the average net assets of Brandes Fund's Class A shares and 3.71%
of the average net assets of Brandes Fund's Class C shares. It is estimated that
during the one-year period following the Closing Date, total fees and expenses
for Northstar Fund will not exceed 1.80% of the average daily net assets of its
Class A shares and 2.50% of average daily net assets of each of its Class B and
Class C shares.
COMPARATIVE FEE TABLE. The following tables show (1) shareholder
transaction expenses incurred by Class A and Class C shares of Brandes Fund and
Class A, Class B and Class C shares of Northstar Fund, and (2) the fees and
expenses incurred by the Class A and Class C shares of Brandes Fund for the 12
months ended October 31, 1996 and anticipated fees and expenses for Class A,
Class B and Class C shares of Northstar Fund for its first year of operations.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
BRANDES FUND NORTHSTAR FUND
CLASS A CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C>
Maximum Sales Load (as a percentage of public
offering price).............................................. 4.75% None 4.75% None None
Maximum Contingent Deferred Sales Load on Sale of Shares (as a
percentage of the lesser of original price or redemption
proceeds).................................................... None(1) 1.00%(3) None(1) 5.00%(2) 1.00%(3)
</TABLE>
6
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
BRANDES FUND NORTHSTAR FUND
CLASS A CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C>
Management Fees.................................... 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees......................................... 0.25% 0.75% 0.30% 1.00% 1.00%
Other Expenses..................................... 0.60% 0.75% 0.50% 0.50% 0.50%
Total Fund Operating Expenses (after
reimbursement)................................... 1.85%(4)(5) 2.50%(4)(5) 1.80%(5)(6) 2.50%(5)(6) 2.50%(5)(6)
</TABLE>
(1) Purchases of Class A shares of $1 million or more are not subject to a sales
charge. If shares are redeemed within 18 months of purchase in the case of
Northstar Fund (12 months of purchase in the case of Brandes Fund), a
contingent deferred sales charge ("CDSC") of 1% will be applied to the
redemption. The CDSC on Class A shares of Northstar Fund acquired pursuant
to the Reorganization will be applicable for a period of 12 months from the
original purchase of the corresponding Class A shares of Brandes Fund.
(2) The Class B CDSC on redemptions decreases 1% annually one year after
purchase to 2% in the fourth and fifth year after purchase and to 0%
thereafter.
(3) If Class C shares are redeemed within one year of purchase, a contingent
deferred sales charge of 1% will be applied to the redemption. The CDSC on
Class C shares of Northstar Fund acquired pursuant to the Reorganization
will be applicable for a period of one year from the original purchase of
the corresponding Class C shares of Brandes Fund.
(4) For the fiscal year ended October 31, 1996, Brandes voluntarily agreed to
reimburse Brandes Fund to ensure that Brandes Fund's total operating
expenses would not exceed 1.85% for Class A shares and 2.50% for Class C
shares. In the absence of this reimbursement, "Total Fund Operating
Expenses" would have been 2.82% of the average net assets of the Brandes
Fund's Class A shares and 3.71% of the average net assets of the Brandes
Fund's Class C shares.
(5) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers, Inc.'s rules regarding investment companies.
(6) Northstar, NAC and Brandes have agreed to waive any management,
administrative and sub-advisory fees until the net assets of Northstar Fund
exceed $50 million. As of February 28, 1997, Brandes Fund had net assets of
$41,794,542. The table assumes that the net assets of Northstar Fund will
exceed $50 million 3 months after the Reorganization. In the absence of this
agreement, "Total Fund Operating Expenses" would have been estimated to be
2.15% of average net assets for Class A shares, 2.85% of average net assets
for Class B shares and 2.85% of average net assets for Class C shares.
EXAMPLE OF EFFECT ON FUND EXPENSES. The following table illustrates the
impact of the Annual Fund Operating Expenses stated above on a $1,000
investment, assuming a 5% annual return. The expenses shown below reflect an
initial sales charge of up to 4.75% of the public offering price that normally
is charged in connection with the sale of each Fund's Class A shares. However,
no initial sales charges will be charged on Class A shares of Northstar Fund
distributed to Class A shareholders of Brandes Fund in connection with the
Reorganization.
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
BRANDES FUND YEAR YEARS YEARS YEARS
<S> <C> <C> <C> <C>
Class A shares(1).............................................................................. $ 65 $ 103 $ 143 $ 254
Class C shares:
Assuming a complete redemption at end of period(2)........................................... $ 35 $ 78 $ 133 $ 284
Assuming no redemption....................................................................... $ 25 $ 78 $ 133 $ 284
<CAPTION>
NORTHSTAR FUND
<S> <C> <C> <C> <C>
Class A shares(1).............................................................................. $ 65 $ 103 $ 143 $ 254
Class B shares:
Assuming a complete redemption at end of period(2)(3)........................................ $ 77 $ 112 $ 158 $ 289
Assuming no redemption(3).................................................................... $ 26 $ 79 $ 136 $ 289
Class C shares:
Assuming a complete redemption at end of period(2)........................................... $ 35 $ 78 $ 133 $ 284
Assuming no redemption....................................................................... $ 25 $ 78 $ 133 $ 284
</TABLE>
(1) Assumes deduction at the time of purchase of the maximum 4.75% initial sales
charge.
(2) Assumes deduction at the time of redemption of the maximum applicable
contingent deferred sales charge.
(3) Ten-year figures assume conversion of Class B shares to Class A shares at
end of sixth year.
7
<PAGE>
PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
OF BRANDES AND NORTHSTAR FUNDS
BRANDES FUND. Shares of Brandes Fund are offered for sale at net asset
value plus a sales charge, as applicable. Class A shares of Brandes Fund are
offered subject to an initial sales charge. Class C shares of Brandes Fund are
sold without an initial sales charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales charge ("CDSC") payable upon
certain redemptions.
Class A shares of Brandes Fund are offered at net asset value plus an
initial or a CDSC as set forth below.
<TABLE>
<CAPTION>
SALES CHARGE AS % OF DEALER COMMISSION
AMOUNT OF PURCHASE OFFERING NET AMOUNT AS % OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 up to $99,999 4.50% 4.71% 4.00%
$100,000 up to $249,999 3.50% 3.62% 3.00%
$250,000 up to $499,999 2.50% 2.56% 2.00%
$500,000 up to $999,999 2.00% 2.04% 1.50%
$1,000,000 or more None None (See below)
</TABLE>
Although no initial sales charge applies on purchases of $1 million or more
of the Class A Shares of Brandes Fund, a CDSC of 1.00% will be imposed on
certain redemptions within one year of the purchase of $1 million or more.
Worldwide may pay commissions to dealers who initiate and are responsible for
purchases of $1 million or more.
Class C shares of Brandes Fund are offered at net asset value without a
sales charge at the time of purchase. A CDSC of 1.00%, however, is imposed upon
most redemptions of Class C shares made within one year from the date of their
purchase.
NORTHSTAR FUND. Shares of Northstar Fund are offered for sale at net asset
value plus a sales charge, as applicable. Class A shares of Northstar Fund are
offered subject to an initial sales charge. Class C shares of Northstar Fund are
sold without an initial sales charge but are subject to higher ongoing expenses
than Class A shares and a CDSC payable upon certain redemptions. Unlike Brandes
Fund, Northstar Fund offers a third class of shares, denominated Class B shares.
Class B shares are subject to a CDSC if redeemed within five years of purchase.
Class A shares of Northstar Fund are offered at net asset value plus an
initial sales charge or CDSC as set forth below.
<TABLE>
<CAPTION>
SALES CHARGE AS % OF DEALER COMMISSION
AMOUNT OF PURCHASE OFFERING NET AMOUNT AS % OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
<S> <C> <C> <C>
Up to $99,999 4.75% 4.99% 4.00%
$100,000 up to $249,999 3.75% 3.90% 3.10%
$250,000 up to $499,999 2.75% 2.83% 2.30%
$500,000 up to $999,999 2.00% 2.04% 1.70%
$1,000,000 or more None None (See below)
</TABLE>
Purchases of over $1 million are subject to a maximum CDSC of 1.00% (scaled
down to 0.50% for amounts of $2.5 million or more, and 0.25% on amounts over $5
million) on redemptions made within eighteen months. The CDSC on Class A shares
acquired pursuant to the Reorganization will be applicable for a period of 12
months from the original purchase of the corresponding Class A shares of Brandes
Fund. Northstar Distributors may pay investment dealers or financial service
firms a commission from its own resources when such investment dealers or
financial service firms initiate and are responsible for purchases of $1 million
or more.
Class C shares of Northstar Fund are offered at net asset value without a
sales charge at the time of purchase. A CDSC of 1.00%, however, is imposed on
redemptions made within one year from the first day of the month after purchase.
The CDSC on Class C shares acquired pursuant to the Reorganization will be
applicable for a period of one year from the original purchase of the
corresponding Class C shares of Brandes Fund.
8
<PAGE>
Unlike Brandes Fund, Northstar Fund offers Class B shares. Class B shares
are offered at net asset value, without an initial sales charge, subject to a
CDSC if shares are redeemed within five years after purchase. As set forth
below, the amount of the deferred sales charge varies depending on the number of
years after purchase that the redemption occurs. Class B shares automatically
convert to Class A shares approximately eight years after purchase. Northstar
Distributors currently pays investment dealers a sales commission of 4% of the
sale price of Class B shares sold by the dealers, subject to future amendment or
termination.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
AS A % OF DOLLAR
AMOUNT SUBJECT
YEARS SINCE PURCHASE TO CHARGE
<S> <C>
First....................................................................... 5%
Second...................................................................... 4%
Third....................................................................... 3%
Fourth...................................................................... 2%
Fifth....................................................................... 2%
Thereafter.................................................................. 0%
</TABLE>
WAIVERS. Both Brandes Fund and Northstar Fund offer a waiver of otherwise
applicable sales charges for certain purchases as outlined in their respective
prospectuses. No sales load will be imposed on the receipt by Brandes Fund
shareholders of shares of Northstar Fund in the Reorganization.
EXCHANGES. Shares of Brandes Fund may be exchanged for shares of the Money
Market Portfolio of The Rodney Square Fund, a money market mutual fund not
affiliated with Brandes Fund. Such exchanges are limited to four per shareholder
account per year. Shares of each class of Northstar Fund are exchangeable for
the same class of shares of Northstar Special Fund, Northstar Growth + Value
Fund, Northstar Growth Fund, Northstar Income and Growth Fund, Northstar Balance
Sheet Opportunities Fund, Northstar Government Securities Fund, Northstar
Strategic Income Fund, Northstar High Yield Fund and Northstar High Total Return
Fund II; or for shares of The Cash Management Fund of Salomon Brothers
Investment Series, a money market fund not affiliated with Northstar Fund.
INVOLUNTARY REDEMPTIONS. Each of Northstar Fund and Brandes Fund may, on at
least 60 days' and 30 days' notice, respectively, effect an involuntary
redemption of a shareholder's account with a current value of less than $500 as
a result of shareholder redemptions.
MINIMUM INVESTMENT. Each of Brandes Fund and Northstar Fund requires a
minimum initial investment of at least $2,500. Northstar Fund reserves the right
in its discretion to accept purchases of less value. The minimum initial
investment of Brandes Fund does not apply to IRA accounts, retirement plan
investments and custodial accounts under the Uniform Gifts or Transfers to
Minors Act, for which the minimum is $1,000, or for purchases through the Fund's
Automatic Investment Plan or purchases by retirement plans through payroll
deductions, for which the minimum is $100. The minimum initial purchase
requirement of Northstar Fund does not apply to IRA accounts, for which the
minimum is $250. The minimum for additional investments in each Fund is $100
($25 for purchases of shares of Northstar Fund by IRA accounts). Both Funds
reserve the right to reject any purchase order.
REDUCED SALES CHARGES. Class A shares of each of Brandes Fund and Northstar
Fund may be purchased at reduced sales charges based on volume purchases through
a Right of Accumulation or Letter of Intention.
DIVIDEND POLICIES OF BRANDES AND NORTHSTAR FUNDS
Brandes Fund declares and pays dividends of net investment income and
distributes any net realized capital gains at least annually. Northstar Fund
also distributes all of its net investment income and any net capital gains at
least annually. If the Reorganization is effected, Brandes Fund may make an
additional distribution or distributions at or prior to the closing of the
Reorganization, as is deemed advisable.
INFORMATION ABOUT THE REORGANIZATION
PLAN OF REORGANIZATION. The following summary of the proposed Plan is
qualified in its entirety by reference to the Plan attached to this Proxy
Statement/Prospectus as Exhibit A.
9
<PAGE>
The Plan provides that Northstar Fund, a newly created series of Northstar
Trust, will acquire all of the assets of Brandes Fund in exchange for shares of
Northstar Fund and the assumption by Northstar Fund of the liabilities of
Brandes Fund on April 21, 1997 (the "Closing Date"), or such later date as
provided for pursuant to the Plan. The number of full and fractional shares of
each class of Northstar Fund to be issued to shareholders of Brandes Fund will
be determined on the basis of the relative net asset values per share and
aggregate net assets for each class of Northstar Fund and Brandes Fund computed
as of immediately after the close of business on the New York Stock Exchange
(currently 4:00 p.m., New York City time) on April 18, 1997 (the "Valuation
Date"). The net asset value per share for both Northstar Fund and Brandes Fund
will be determined by dividing each class' respective assets, less its
respective liabilities, by the total number of its respective outstanding
shares. Portfolio securities of both Northstar Fund and Brandes Fund will be
valued in accordance with the valuation practices of Brandes Fund as described
in the prospectus of Brandes Fund, which is incorporated by reference herein.
Northstar Fund will assume all liabilities of Brandes Fund. Brandes has
agreed that after Brandes Fund is terminated, Brandes will provide for the
indemnification of the current independent trustees of Brandes Trust against
liabilities arising from their service as trustees prior to the termination of
Brandes Fund.
Immediately after the transfer of Brandes Fund's assets to Northstar Fund
on the Closing Date, Brandes Fund will distribute pro rata to its shareholders
of record as of the close of business on the Valuation Date the full and
fractional shares of Northstar Fund received by Brandes Fund and will terminate.
Such distribution will be accomplished by the establishment of accounts on the
share records of Northstar Fund in the name of Brandes Fund shareholders, each
representing the respective pro rata number of full and fractional shares of
Northstar Fund due such shareholders. Following the Reorganization, shareholders
will own the same class of shares of Northstar Fund as they previously held of
Brandes Fund. Share certificates of Brandes Fund will, upon presentation to the
transfer agent of Northstar Fund, be exchanged for shares of Northstar Fund.
Certificates for Northstar Fund's shares will be issued only upon written
request.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan. The Plan may be terminated and the Reorganization abandoned
prior to the Closing Date, before or after approval by shareholders of Brandes
Fund, by resolution of the Board of Trustees of Brandes Trust or the Board of
Trustees of Northstar Trust, if circumstances should develop that, in the
opinion of either Board, make proceeding with the Reorganization inadvisable.
Brandes and Northstar have agreed to pay all expenses of Brandes Fund
related to the Reorganization, so that shareholders of Brandes Fund will not be
required to bear such expenses. Brandes and Northstar have also entered into an
agreement, contingent upon completion of the Reorganization, in which Northstar
will pay to Brandes approximately $375,000 (subject to adjustment based on the
aggregate net assets of Brandes Fund at the Valuation Date and the rate of
redemption of shares issued in the Reorganization for a period of six months
thereafter) and Brandes has agreed to sell certain assets to Northstar and has
agreed not to serve as the investment adviser or sub-adviser to another mutual
fund comparable to Northstar Fund for a period of two years, subject to certain
limited exceptions.
The Boards of Trustees of Northstar Fund and Brandes Fund have determined
that the interests of existing shareholders of the respective Funds will not be
diluted as a result of the transactions contemplated by the Reorganization, and
that participation in the Reorganization is in the best interests of
shareholders of Northstar Fund and Brandes Fund, respectively. Approval of the
Plan will require the affirmative vote of the holders of a majority of each of
the Class A and Class C shares of Brandes Fund. If the Reorganization is not
approved by both Class A and Class C shares of Brandes Fund, the Board of
Trustees of Brandes Trust will consider other possible courses of action,
including continuation of the present operations of Brandes Fund.
Full and fractional shares of beneficial interest of Northstar Fund will be
issued to shareholders of Brandes Fund in accordance with the procedures under
the Plan as described above. Each share will be fully paid and non-assessable by
Northstar Trust when issued, will be transferable without restrictions, and will
have no preemptive or conversion rights. See "Comparative Information on
Shareholder Rights" for additional information with respect to the shares of
Northstar Fund.
FEDERAL INCOME TAX CONSEQUENCES. The Reorganization is intended to qualify
for Federal income tax purposes as a tax-free reorganization under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended, with no gain or loss
recognized by Northstar Fund, Brandes Fund, or shareholders of either Fund as a
consequence of the Reorganization. As a condition to the Closing of the
Reorganization, Brandes Fund and Northstar Fund will receive an opinion from
Dechert Price & Rhoads to that effect based on certain assumptions and
representations made by Brandes Fund and Northstar Fund.
Shareholders of Brandes Fund should consult their tax advisers regarding
the effect, if any, of the proposed Reorganization in light of their individual
circumstances. BECAUSE THE FOREGOING DISCUSSION RELATES ONLY TO
10
<PAGE>
THE FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION, SHAREHOLDERS OF
BRANDES FUND SHOULD ALSO CONSULT THEIR TAX ADVISERS AS TO STATE, LOCAL AND OTHER
TAX CONSEQUENCES, IF ANY, OF THE REORGANIZATION.
CAPITALIZATION. The following table shows the capitalization of each Fund
at October 31, 1996 (unaudited) and on a pro forma combined basis (unaudited)
giving effect to the Reorganization:
<TABLE>
<CAPTION>
NORTHSTAR BRANDES PRO FORMA
FUND FUND COMBINED
<S> <C> <C> <C>
Net assets
Class A........................................................................... $ 10.00 $16,776,556 $16,776,556
Class B........................................................................... $ 10.00 N/A $ 10
Class C........................................................................... $ 10.00 $14,530,340 $14,530,340
Net Asset Value Per Share
Class A........................................................................... $ 10.00 $ 14.81 $ 10.00
Class B........................................................................... $ 10.00 N/A $ 10.00
Class C........................................................................... $ 10.00 $ 14.68 $ 10.00
Shares outstanding
Class A........................................................................... 1 1,132,809 1,677,656
Class B........................................................................... 1 N/A 0
Class C........................................................................... 1 989,620 1,453,034
</TABLE>
CONSIDERATIONS OF BRANDES TRUST'S BOARD OF TRUSTEES. As discussed above,
the Board of Trustees of Brandes Trust has approved the Reorganization for
various reasons. In addition to the reasons noted above, the Board took into
account that the Reorganization would eliminate Brandes Fund's obligation to
reimburse Brandes for the amount of Brandes' reduction in fees or reimbursement
of expenses since Brandes Fund's commencement of operations. For example, for
the fiscal year ended October 31, 1996, Brandes voluntarily agreed to reduce
fees and reimburse expenses to ensure that Brandes Fund's total operating
expenses would not exceed 1.85% of average net assets for Class A shares and
2.50% of average net assets for Class C shares. The total amount waived or
reimbursed by Brandes during the fiscal year ended October 31, 1996 equalled
0.97% of Class A shares' average net assets and 1.21% of Class C shares' average
net assets. For a three year period following the waivers or reimbursements,
Brandes Fund has an obligation to reimburse Brandes for such amounts provided
the Fund is able to effect such reimbursement. As of October 31, 1996, Brandes
Fund was obligated to reimburse Brandes in the aggregate amount of $496,237.
Although Northstar Fund does not have identical expense cap arrangements
with Northstar, because of the Northstar arrangements disclosed above (i.e., the
waiver of management, administrative and sub-advisory expenses until the net
assets of Northstar Fund exceed $50 million and the estimation that during the
one-year period following the Closing Date, total fees and expenses for
Northstar Fund will not exceed 1.80% of average daily net assets of its Class A
shares and 2.50% of average daily net assets of its Class B and Class C shares),
it is believed that identical expense cap arrangements are not necessary. In
addition, The Board of Trustees took into account that Brandes Fund's fees for
distribution and shareholder services to Class A shares are 0.35% of average
daily net assets while Northstar Fund's comparable fees are 0.30% of average
daily net assets.
In determining whether to recommend approval of the Reorganization to
shareholders of Brandes Fund, the Board of Trustees of Brandes Trust also
considered, among other factors, the terms and conditions of the Reorganization
and that the Reorganization would not result in dilution of shareholder
interests; the sufficient financial, operational and personnel resources and
capabilities of Northstar Trust's service providers; the comparable expense
ratios and the similarity of the fees and expenses of Brandes Fund and Northstar
Fund; the similarity of the investment objectives, policies and restrictions of
Northstar Fund to those of Brandes Fund; the operating policies of Northstar
Fund, including its method of valuing portfolio securities; that shareholders of
Brandes Fund will not bear the costs of the Reorganization; the absence of
adverse tax consequences of the Reorganization; and the potential benefits of
the transaction to other persons (such as Brandes, Northstar, and other service
providers to the Funds). In reaching the decision to recommend that the
shareholders of Brandes Fund vote to approve the Reorganization, the Board of
Trustees of Brandes Trust concluded that participation of Brandes Fund in the
Reorganization is in the best interests of its shareholders and that the
interests of existing shareholders of Brandes Fund will not be diluted as a
result of the Reorganization.
11
<PAGE>
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
Northstar Fund is a series of Northstar Trust, a Massachusetts business
trust organized in 1993. Brandes Fund is a series of Brandes Trust, a Delaware
business trust organized in 1994. As a Massachusetts business trust, Northstar
Trust is governed by its Declaration of Trust, as amended, its By-Laws, and
applicable Massachusetts law. As a Delaware business trust, Brandes Trust is
similarly governed by its Declaration of Trust, its By-Laws, and applicable
Delaware law. The declarations of trust of both Northstar Trust and Brandes
Trust are substantially similar, and, consequently, rights of Northstar Fund
shareholders will not differ materially from those of shareholders of Brandes
Fund.
Both Trusts are authorized to create an unlimited number of series and,
with respect to each series, to issue an unlimited number of full and fractional
shares of one or more classes and to divide or combine the shares into a greater
or lesser number of shares without thereby changing the proportionate beneficial
interests in the series. All Northstar Trust shares and all Brandes Trust shares
have equal voting rights, except that only shares of the respective series or
separate classes within a series are entitled to vote on matters concerning only
that series or class.
Northstar Trust, Northstar Fund, Brandes Trust and Brandes Fund do not hold
annual shareholder meetings. There normally will be no meetings of shareholders
of Northstar Trust or Brandes Trust to elect trustees unless fewer than a
majority of the trustees holding office have been elected by shareholders.
However, 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 any affected series or class having voting rights.
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 Northstar Trust contains provisions intended to limit
such liability and to provide indemnification out of Northstar Fund property of
any shareholder charged or held personally liable for obligations on liabilities
of Northstar Fund solely by reason of being or having been a shareholder of
Northstar Fund and not because of such shareholder's acts or omissions or for
some other reason. Thus, the risk of a shareholder of Northstar Fund incurring
financial loss on account of shareholder liability is limited to circumstances
in which Northstar Fund itself would be unable to meet its obligations. There is
no comparable possibility under Delaware law, under which the Brandes Fund is
organized.
ADDITIONAL INFORMATION ABOUT NORTHSTAR FUND AND BRANDES FUND
Information concerning the operation and management of Northstar Fund is
incorporated herein by reference from its prospectus dated February 28, 1997, a
copy of which is included herewith and incorporated by reference herein.
Additional information concerning Northstar Fund is included in Northstar Fund's
Statement of Additional Information ("SAI") dated February 28, 1997, which has
been filed with the SEC and is incorporated by reference in its prospectus
included herewith. Additional information is also included in the SAI dated
March 6, 1997 related to this transaction which has been filed with the SEC and
is incorporated by reference herein. A copy of each SAI is available upon
request and without charge by calling (800) 595-7827.
Information about Brandes Fund is included in its current prospectus dated
February 28, 1997, copies of which are available upon request and without charge
by calling Brandes Trust at (619) 755-0239. Additional information is included
in Brandes Fund's SAI dated February 28, 1997. That SAI has been filed with the
SEC and, along with Brandes Fund's prospectus, is incorporated by reference
herein. A copy of that SAI is available upon request and without charge by
calling Brandes Trust at (619) 755-0239.
Reports and other information filed by Northstar Trust and Brandes Trust,
including charter documents, can be inspected and copied at the Public Reference
Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and the Northeast Regional Office of the SEC, 7 World Trade Center, Suite
1300, New York, NY 10048 and the Pacific Regional Office of the SEC, 5670
Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. Copies of such
materials can also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20459 at prescribed rates.
VOTING INFORMATION
Proxies for the Meeting are being solicited from the shareholders of
Brandes Fund by the Board of Trustees of Brandes Trust. A proxy may be revoked
at any time at or before the Meeting by oral or written notice to the Secretary
of Brandes Fund, 12750 High Bluff Drive, San Diego, CA 92130, (619) 755-0239.
Unless revoked, all valid proxies will be voted in
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accordance with the specifications thereon or, in the absence of such
specifications, for approval of the Plan and the Reorganization.
Additional solicitations may be made by telephone, telegraph, facsimile or
personal contact by officers or employees of Brandes and its affiliates or by
Shareholder Communications Corporation ("SCC"), a professional proxy
solicitation firm. Expenses of proxy solicitation, including the fees of SCC,
which are expected to be $3,000, are included in the expenses of the
Reorganization, which will be borne by Brandes and Northstar. Shareholders'
votes may be taken by telephone by representatives of SCC, subject to procedures
designed to authenticate shareholders' identities and confirm voting
instructions.
Class A and Class C Shareholders of Brandes Fund of record at the close of
business on February 14, 1997 (the "Record Date") will be entitled to vote at
the Meeting or any adjournment thereof. The holders of 40% of the Class A and
Class C shares of Brandes Fund outstanding at the close of business on the
Record Date present in person or represented by proxy will constitute a quorum
of the Class A shareholders and Class C shareholders, respectively, for the
Meeting. Shareholders are entitled to one vote for each share held, and each
fractional share will be entitled to a proportionate fractional vote. As of
February 14, 1997, there were issued and outstanding 1,319,662.423 Class A
shares of beneficial interest of Brandes Fund and 1,193,091.646 Class C shares
of beneficial interest of Brandes Fund.
As of February 14, 1997, there were no outstanding shares of Northstar
Fund. As of February 14, 1997, the following persons owned more than 5% of
Brandes Fund's outstanding Class A shares:
Dreyfus Trust Company, Trustee for Brown Profit Sharing Plan, 144
Glenn Curtis Boulevard, Uniondale, New York (17%).
In the event that a quorum is not present at the Meeting, or a quorum is
present at the Meeting but sufficient votes to approve the Plan are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. If a quorum is not present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR the Plan in
favor of such an adjournment and will vote those proxies required to be voted
AGAINST the Plan against any such adjournment.
"Broker non-votes" are shares held in a broker's street name for which the
broker indicates that instructions have not been received from the beneficial
owners or other persons entitled to vote, and the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
and against the proposal because the required vote is a percentage of the shares
outstanding.
REQUIRED VOTE. Approval of the Plan will require the affirmative vote of
the holders of a majority of the outstanding voting securities of each of the
Class A and Class C shares of Brandes Fund, voting separately. The Plan will not
be approved, and the Reorganization will not be effected, unless the requisite
vote is provided by both Class A and Class C shareholders of Brandes Fund.
THE BOARD OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE REORGANIZATION.
SUBMISSION OF SHAREHOLDER PROPOSALS. Brandes Fund does not hold regular
shareholders' meetings. Shareholders wishing to submit proposals for inclusion
in a proxy statement for a subsequent shareholders' meeting should send their
written proposals to the Secretary of Brandes Trust at 12750 High Bluff Drive,
San Diego, California 92130.
OTHER MATTERS TO COME BEFORE THE MEETING. The Trustees of Brandes Trust
know of no other business to be brought before the Meeting. However, if any
other matters properly come before the Meeting, proxies will be voted in
accordance with the judgment of the Trustees.
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 24th day of February, 1997, by and between Northstar Trust (the "Northstar
Trust"), a Massachusetts business trust, with its principal place of business at
Two Pickwick Plaza, Greenwich, Connecticut 06830 on behalf of its Northstar
International Value Fund series (the "Acquiring Fund") and Brandes Investment
Trust (the "Brandes Trust"), a Delaware business trust, with its principal place
of business at 12750 High Bluff Drive, San Diego, California 92130, on behalf of
its Brandes International Fund series (the "Acquired Fund").
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for shares of beneficial
interest of the Acquiring Fund (the "Acquiring Fund Shares"), the assumption by
the Acquiring Fund of all liabilities of the Acquired Fund, and the distribution
of the Acquiring Fund Shares to the shareholders of the Acquired Fund in
termination of the Acquired Fund as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, the Brandes Trust and the Northstar Trust are registered open-end,
management investment companies and the Acquired Fund owns securities which
generally are assets of the character in which the Acquiring Fund is permitted
to invest;
WHEREAS, the Brandes Trust is authorized to issue its shares of beneficial
interest in separate series, including the Acquired Fund, each of which
maintains a separate and distinct portfolio of assets;
WHEREAS, the Northstar Trust is authorized to issue its shares of
beneficial interest in separate series, including the Acquiring Fund, each of
which maintains a separate and distinct portfolio of assets;
WHEREAS, the shares of beneficial interest of the Brandes Trust with
respect to the Acquired Fund are authorized to be issued in multiple classes,
including classes designated "Class A shares" and "Class C shares;"
WHEREAS, the shares of beneficial interest of the Northstar Trust with
respect to the Acquiring Fund are authorized to be issued in multiple classes,
including classes designated "Class A shares" and "Class C shares;"
WHEREAS, the parties intend that the Acquiring Fund shall have nominal
assets and liabilities prior to the transaction contemplated by this Agreement
and shall continue the investment operations of the Acquired Fund thereafter,
and that in this regard certain actions shall be taken as described in this
Agreement;
WHEREAS, the Board of Trustees of the Northstar Trust, on behalf of the
Acquiring Fund, has determined that the exchange of all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired Fund by the Acquiring Fund is in the best interests of the
Acquiring Fund shareholders and that the interests of the existing shareholders
of the Acquiring Fund would not be diluted as a result of this transaction;
WHEREAS, the Board of Trustees of the Brandes Trust, on behalf of the
Acquired Fund, has determined that the exchange of all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired Fund by the Acquiring Fund is in the best interests of the Acquired
Fund shareholders and that the interests of the existing shareholders of the
Acquired Fund would not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN
EXCHANGE FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND
LIABILITIES AND THE TERMINATION OF THE ACQUIRED FUND
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Brandes Trust on
behalf of the Acquired Fund agrees to transfer all of the Acquired Fund's assets
as set forth in paragraph 1.2 to the Acquiring Fund, and the Northstar Trust on
behalf of the Acquiring Fund agrees in exchange therefor --
(a) to deliver to the Acquired Fund the number of full and fractional
(i) Class A Acquiring Fund Shares determined by dividing the value of the
Acquired Fund's net assets attributable to Acquired Fund Class A shares
computed in the
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manner and as of the time and date set forth in paragraph 2.1 by the net
asset value of one Class A Acquiring Fund Share computed in the manner and
as of the time and date set forth in paragraph 2.2 and (ii) Class C
Acquiring Fund Shares determined by dividing the value of the Acquired
Fund's net assets attributable to Acquired Fund Class C shares computed in
the manner and as of the time and date set forth in paragraph 2.1 by the
net asset value of one Class C Acquiring Fund Share computed in the manner
and as of the time and date set forth in paragraph 2.2; and
(b) to assume all liabilities of the Acquired Fund, as set forth in
paragraph 1.3.
Such transactions shall take place at the closing provided for in paragraph
3.1 (the "Closing").
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all property, including, without limitation, all cash,
securities, commodities and futures interests, claims (whether absolute or
contingent, known or unknown, accrued or unaccrued) and dividends or interest
receivable which are owned by the Acquired Fund and any deferred expenses shown
as an asset on the books of the Acquired Fund (the "Acquired Fund Assets") on
the Valuation Date provided in paragraph 2.1.
1.3 The Acquiring Fund shall assume all liabilities of the Acquired Fund.
1.4 Immediately after the transfer of assets provided for in paragraph 1.1,
the Acquired Fund will distribute pro rata to the Acquired Fund's shareholders
of record, determined as of the close of business on the Valuation Date (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares received by the
Acquired Fund pursuant to paragraph 1.1 and will terminate. Such distribution
will be accomplished by the transfer of the Acquiring Fund Shares then credited
to the account of the Acquired Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names of the Acquired
Fund Shareholders and representing the respective pro rata number of the
Acquiring Fund Shares due such shareholders by class (i.e., the account for a
shareholder of Class A Acquired Fund shares shall be credited with the
respective pro rata number of Class A Acquiring Fund Shares due that shareholder
and the account for a shareholder of Class C Acquired Fund Shares shall be
credited with the respective pro rata number of Class C Acquiring Fund Shares
due that shareholder). All issued and outstanding shares of the Acquired Fund
will simultaneously be canceled on the books of the Acquired Fund, although
share certificates representing interests in the Acquired Fund will represent a
number of Acquiring Fund Shares after the Closing Date as determined in
accordance with Section 2.3. The Acquiring Fund shall not issue certificates
representing the Acquiring Fund Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued in
the manner described in the Acquiring Fund's prospectus and statement of
additional information.
2. VALUATION
2.1 The value of the Acquired Fund's assets to be acquired by the Acquiring
Fund hereunder shall be the value of such assets computed as of the close of
business on the New York Stock Exchange on April 18, 1997 (such time and date
being hereinafter called the "Valuation Date"), using the valuation procedures
set forth in the Acquired Fund's Declaration of Trust and prospectus or
statement of additional information, subject to adjustment by the amount, if
any, agreed to by the Acquired and Acquiring Funds.
2.2 The net asset value of each class of Acquiring Fund Shares shall be the
net asset value per share computed as of the close of business of the New York
Stock Exchange on the Valuation Date, using the valuation procedures set forth
in the Acquiring Fund's Declaration of Trust and prospectus or statement of
additional information, subject to adjustment by the amount, if any, agreed to
by the Acquiring and Acquired Funds.
2.3 The number of each class of Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's assets
shall be determined pursuant to paragraph 1.1.
2.4 All computations of value shall be made by agreement between ICAC and
Northstar Administrators Corporation ("NAC"). The parties agree to use
commercially reasonable efforts to resolve any material pricing differences
between the prices of portfolio securities determined in accordance with their
respective pricing policies and procedures.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be the next business date following the
Valuation Date, or such other date as the parties may agree to in writing. The
time of the Closing shall be no later than 8:00 a.m. New York time on the
Closing Date. All acts
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taking place at the Closing shall be deemed to take place simultaneously as of
8:00 a.m. New York time. The Closing shall be held at the offices of the
Northstar Trust, or at such other place as the parties may agree.
3.2 State Street Bank and Trust Company, as custodian for the Acquiring
Fund (the "Custodian"), shall deliver at the Closing a certificate of an
authorized officer stating that: (a) the Acquired Fund's portfolio securities,
cash, and any other assets have been delivered in proper form to the Acquiring
Fund within five business days prior to or on the Closing Date; and (b) all
necessary taxes, including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment has been made, in
conjunction with the delivery of portfolio securities. The Acquiring Fund may
waive compliance with this paragraph 3.2 if in its sole discretion it determines
to do so.
3.3 In the event that on the Valuation Date (a) the New York Stock Exchange
or another primary trading market for portfolio securities of the Acquiring Fund
or the Acquired Fund shall be closed to trading or trading thereon shall be
restricted, or (b) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate appraisal of the value of the net
assets of the Acquiring Fund or the Acquired Fund is impracticable, the
Valuation Date shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have been
restored.
3.4 NAC, on behalf of the Acquiring Fund, shall deliver at the Closing a
certificate of an authorized officer stating that NAC's records contain the
names and addresses of the Acquired Fund Shareholders and the number and
percentage ownership of outstanding shares owned by each such shareholder by
class immediately prior to the Closing. The Acquiring Fund shall issue and
deliver a confirmation evidencing the Acquiring Fund Shares to be credited on
the Closing Date to the Secretary of the Acquired Fund or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Brandes Trust with respect to the Acquired Fund represents and
warrants to the Acquiring Fund as follows:
(a) The Brandes Trust is a business trust duly organized, validly
existing and in good standing under the laws of Delaware.
(b) The Brandes Trust is a registered open-end management investment
company, and its registration with the Securities and Exchange Commission
(the "Commission") as an investment company with respect to each series of
Shares it offers, including those of the Acquired Fund, under the
Investment Company Act of 1940 ("1940 Act") is in full force and effect.
(c) The Acquired Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of
the Brandes Trust's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquired Fund or the Brandes Trust is a party or by which it is bound.
(d) The Acquired Fund has no material contracts or other material
commitments (other than this Agreement) which will be terminated with
liability to it prior to the Closing Date.
(e) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any of its properties or
assets which, if adversely determined, would materially and adversely
affect its financial condition or the conduct of its business. The Acquired
Fund knows of no facts which might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate
the transactions herein contemplated.
(f) The Statements of Assets and Liabilities of the Acquired Fund at
October 31, 1995 and 1996 (copies of which have been delivered by the
Acquired Fund to the Acquiring Fund) have been audited by Ernst & Young
LLP, independent certified public accountants, and are in accordance with
generally accepted accounting principles consistently applied, and such
Statements fairly reflect the financial condition of the Acquired Fund as
of such dates, and there are no known contingent liabilities of the
Acquired Fund as of such dates not disclosed therein.
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(g) Since October 31, 1996, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquired Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund. For the purposes of this
subparagraph (g), a decline in net asset value per share of the Acquired
Fund shall not constitute a material adverse change.
(h) The Acquired Fund has valued, and will continue to value, its
portfolio securities and other assets in accordance with applicable legal
requirements.
(i) At the Closing Date, all Federal and other tax returns and reports
of the Acquired Fund required by law then to be filed shall have been
filed, and all Federal and other taxes shall have been paid so far as due,
or provision shall have been made for the payment thereof, and to the best
of the Acquired Fund's knowledge no such return is currently under audit
and no assessment has been asserted with respect to such returns.
(j) For each taxable year of its operation, the Acquired Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Acquired Fund. All of the issued and
outstanding shares of the Acquired Fund will, at the time of Closing, be
held by the persons and in the amounts set forth in the records of
Investors Bank and Trust Company, the transfer agent to the Acquired Fund.
The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Fund shares (other
than pursuant to the Acquired Fund's dividend reinvestment plan), nor is
there outstanding any security convertible into any of the Acquired Fund
shares (other than shares of other series of the Brandes Trust and shares
of the Money Market Portfolio of the Rodney Square Fund in connection with
the Acquired Fund's exchange privilege).
(l) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to the
Acquiring Fund pursuant to paragraph 1.2 and full right, power, and
authority to sell, assign, transfer and deliver such assets hereunder, and
upon delivery and payment for such assets, the Acquiring Fund will acquire
good and marketable title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise under the
Securities Act of 1933, as amended (the "1933 Act") other than as disclosed
to the Acquiring Fund.
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of the Brandes Trust's Trustees, and, subject to such approval
and the approval of the Acquired Fund shareholders, this Agreement
constitutes a valid and binding obligation of the Acquired Fund,
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles.
(n) The Acquired Fund has the power to own all of its properties and
assets and, subject to the approval of Acquired Fund shareholders, to carry
out and consummate the transactions contemplated herein, and has all
necessary federal, state and local authorizations to carry on its business
as now being conducted and to consummate the transactions contemplated by
this Agreement.
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired
Fund of the transaction contemplated by this Agreement, except such as may
be required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, the rules and regulations under
those Acts, or state securities laws, all of which shall have been received
prior to the Closing Date, except for such consents, approvals,
authorizations or orders as may be required subsequent to the Closing Date.
(p) Insofar as the following relate to it, (i) the registration
statement filed by the Northstar Trust on Form N-14 relating to the shares
of the Acquiring Fund that will be registered with the SEC pursuant to this
Agreement, which shall include or incorporate by reference the proxy
statement of the Brandes Trust on behalf of the Acquired Fund and
prospectus of the Acquiring Fund with respect to the transactions
contemplated by this Agreement, and any supplement or amendment thereto or
to the documents contained or incorporated therein by reference (the "N-14
Registration Statement"), and (ii) the proxy materials of the Brandes Trust
on behalf of the Acquired Fund included in the N-14 Registration Statement
and filed with the SEC pursuant to Section 14(a) of the 1934 Act and
Section 20(a) of the 1940 Act with respect to the transactions contemplated
by this Agreement, and any supplement or amendment thereto or the documents
appended thereto (the "Reorganization Proxy Materials"), from their
effective and clearance dates with the
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Commission, through the time of the meeting of shareholders of the Acquired
Fund contemplated therein (the "Shareholders Meeting") and at the Closing
Date: (i) shall comply in all material respects with the provisions of the
1933 Act, 1934 Act and the 1940 Act, the rules and regulations thereunder,
and applicable state securities laws, and (ii) shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the N-14
Registration Statement or the Reorganization Proxy Materials made in
reliance upon and in conformity with information furnished by or on behalf
of the Northstar Trust or the Acquiring Fund if furnished by its investment
adviser, administrator, custodian or transfer agent, acting in their
capacity as such.
(q) The Acquired Fund shall not sell or otherwise dispose of any
shares of the Acquiring Fund to be received in the transactions
contemplated herein, except in distribution to its shareholders as
contemplated herein.
(r) The Acquired Fund shall provide a list of all portfolio securities
held by it to the Acquiring Fund at least fifteen days before the Closing
Date and shall immediately notify the Acquiring Fund's investment adviser
of any portfolio security thereafter acquired or sold by the Acquired Fund.
Upon notice by the Acquiring Fund, the Acquired Fund shall immediately sell
any portfolio security that the Acquiring Fund identifies as impermissible
under the investment policies, objectives and limitations of the Acquired
Fund.
4.2 THE NORTHSTAR TRUST ON BEHALF OF THE ACQUIRING FUND REPRESENTS AND
WARRANTS TO THE ACQUIRED FUND AS FOLLOWS:
(a) The Northstar Trust is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(b) The Northstar Trust is a registered open-end management investment
company and its registration with the Commission as an investment company
with respect to each series of shares it offers, including those of the
Acquiring Fund, under the 1940 Act, is in full force and effect.
(c) The prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations
of the Commission thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of
the Northstar Trust's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquiring Fund or the Northstar Trust is a party or by which it is bound.
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or threatened
against the Acquiring Fund or any of its properties or assets, except as
previously disclosed in writing to the Acquired Fund. The Acquiring Fund
knows of no facts which might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate
the transactions contemplated herein.
(f) The Statements of Assets and Liabilities of the Northstar Trust at
October 31, 1995 and 1996, copies of which have been delivered by the
Northstar Trust to the Brandes Trust, have been audited by Coopers &
Lybrand LLP, independent certified public accountants, are in accordance
with generally accepted accounting principles consistently applied, and
such Statements fairly reflect the financial condition of the Northstar
Trust as of such dates, and there are no known contingent liabilities of
the Northstar Trust as of such dates not disclosed therein.
(g) Since October 31, 1996, there has not been any material adverse
change in the Northstar Trust's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Northstar Trust of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquired Fund. For the purposes of this
subparagraph (g), a decline in net asset value per share of any series of
the Northstar Trust shall not constitute a material adverse change.
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(h) The Northstar Trust shall file a post-effective amendment (the
"N-1A Post-Effective Amendment") to its registration statement on Form N-1A
with the Commission, and appropriate state securities commissions, as
promptly as practicable so that the Acquiring Fund and its shares are
registered under the 1933 Act, 1940 Act and applicable state securities
laws. In addition, the Northstar Trust shall file an N-14 Registration
Statement, which shall include the Reorganization Proxy Materials, with the
Commission, and with appropriate state securities commissions, relating to
the matters described herein as promptly as practicable.
(i) The Acquiring Fund has valued, and will continue to value, its
portfolio securities and other assets in accordance with applicable legal
requirements.
(j) At the Closing Date, all Federal and other tax returns and reports
of the Northstar Trust required by law then to be filed shall have been
filed or an extension shall have been obtained, and all Federal and other
taxes shown as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and to the best of
the Northstar Trust's knowledge no such return is currently under audit and
no assessment has been asserted with respect to such return. The Acquiring
Fund intends to qualify as a regulated investment company under Part I of
Subchapter M of the Code.
(k) All issued and outstanding Acquiring Fund Shares are, and at the
Closing Date all issued and outstanding Acquiring Fund shares will be, duly
and validly issued and outstanding, fully paid and non-assessable by the
Acquiring Fund (recognizing that, under Massachusetts law, Acquiring Fund
shareholders could, under certain circumstances, be held personally liable
for obligations of the Acquiring Fund). The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any Acquiring Fund Shares (other than pursuant to the Acquiring
Fund's dividend reinvestment plan), nor is there outstanding any security
convertible into any Acquiring Fund shares (other than shares of other
series of the Northstar Trust).
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of the Trustees of the Northstar Trust, and, subject to such
approval, this Agreement constitutes a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights and to general equity
principles.
(m) The Acquiring Fund has the power to own all of its properties and
assets and to consummate the transaction contemplated herein, and has all
necessary federal, state and local authorizations to carry on its business
as now being conducted and to consummate the transaction contemplated by
this Agreement.
(n) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquiring
Fund of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, the 1934 Act, the 1940 Act, the rules and
regulations under those Acts, or state securities laws, all of which shall
have been received prior to the Closing Date, except for such consents,
approvals, authorizations or orders as may be required subsequent to the
Closing Date.
(o) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant
to the terms of this Agreement will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly
issued shares of beneficial interest of the Acquiring Fund, and will be
fully paid and non-assessable by the Acquiring Fund (recognizing that,
under Massachusetts law, Acquiring Fund Shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Acquiring Fund).
(p) The N-14 Registration Statement and the Reorganization Proxy
Materials, from their effective and clearance dates with the Commission,
through the time of the Shareholders Meeting and at the Closing Date: (i)
shall comply in all material respects with the provisions of the 1933 Act,
1934 Act and the 1940 Act, the rules and regulations thereunder, and
applicable state securities laws, and (ii) shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein not
misleading; provided, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the N-14
Reorganization Statement or the Reorganization Proxy Materials made in
reliance upon and in conformity with information furnished by or on behalf
of the Brandes Trust or the Acquired Fund if furnished by its investment
adviser, administrator, custodian or transfer agent, acting in their
capacity as such.
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(q) The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and
applicable state securities laws in order to continue its operations after
the Closing Date.
5. COVENANTS OF THE BRANDES TRUST
5.1 The Brandes Trust will operate the business of the Acquired Fund in the
ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include customary
dividends and distributions, as well as such other distributions as may be
deemed advisable.
5.2 The Brandes Trust covenants that the Acquiring Fund Shares to be issued
hereunder to the Acquired Fund are not being acquired for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agreement.
5.3 The Brandes Trust will assist the Northstar Trust in obtaining such
information as the Northstar Trust reasonably requests concerning the beneficial
ownership of the Acquired Fund Shares.
5.4 The Brandes Trust will provide the Northstar Trust with information
reasonably necessary for the preparation of the N-14 Registration Statement and
the Reorganization Proxy Materials included therein, in compliance with the 1933
Act, the 1934 Act and the 1940 Act in connection with the Shareholders Meeting.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BRANDES TRUST
The obligations of the Brandes Trust to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Brandes Trust of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations and warranties of the Northstar Trust on behalf of
the Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date.
6.2 The Northstar Trust shall have delivered to the Brandes Trust a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the
Brandes Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Northstar Trust made in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement and as to such other matters
as the Brandes Trust shall reasonably request.
6.3 The Northstar Trust shall have performed and complied in all material
respects with each of its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the Closing Date.
6.4 The Brandes Trust shall have received on the Closing Date the opinion
of Dechert Price & Rhoads, counsel to the Northstar Trust, dated as of the
Closing Date, covering the following points:
(a) The Northstar Trust is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has the power to own all of its properties and assets,
including those of the Acquiring Fund, and to carry on its business,
including that of the Acquiring Fund, as presently conducted.
(b) The Agreement has been duly authorized, executed and delivered by
the Northstar Trust on behalf of the Acquiring Fund and, assuming that the
N-14 Registration Statement and Reorganization Proxy Materials comply with
the 1933 Act, the 1934 Act and the 1940 act and the rules and regulations
thereunder and, assuming due authorization, execution and delivery of the
Agreement by the Brandes Trust, is a valid and binding obligation of the
Northstar Trust on behalf of the Acquiring Fund enforceable against the
Northstar Trust in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally and to general equity
principles.
(c) The Acquiring Fund Shares to be issued to the Acquired Fund
Shareholders as provided by this Agreement are duly authorized, upon such
delivery will be validly issued and outstanding, and are fully paid and
non-assessable by the Acquiring Fund (recognizing that, under Massachusetts
law, shareholders of the Acquiring Fund could, under certain circumstances,
be held personally liable for the obligations of the Acquiring Fund), and
no shareholder of the Acquiring Fund has any preemptive rights to
subscription or purchase in respect thereof.
A-7
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(d) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not, result in a
material violation of the Northstar Trust's Declaration of Trust or By-Laws
or any provision of any agreement (known to such counsel) to which the
Northstar Trust is a party or by which it is bound or, to the knowledge of
such counsel, result in the acceleration of any obligation or the
imposition of any penalty under any agreement, judgment, or decree to which
the Northstar Trust is a party or by which it is bound.
(e) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or the Commonwealth of Massachusetts is required for the
consummation by the Acquiring Fund of the transactions contemplated herein,
except such as have been obtained under the 1933 Act, the 1934 Act and the
1940 Act, and such as may be required under state securities laws.
(f) Only insofar as they relate to the Northstar Trust and the
Acquiring Fund, the descriptions in the N-14 Registration Statement and
Reorganization Proxy Materials of statutes, legal and governmental
proceedings and contracts and other documents, if any, are accurate and
fairly present the information required to be shown.
(g) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Northstar Trust and the
Acquiring Fund, existing on or before the effective date of the N-14
Registration Statement or the Closing Date required to be described in the
N-14 Registration Statement or to be filed as exhibits to the N-14
Registration Statement which are not described as required.
(h) The Northstar Trust is registered as an investment company with
respect to each series of shares it offers, including those of the
Acquiring Fund, under the 1940 Act, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(i) Shares of the Northstar Trust, including those of the Acquiring
Fund, are registered under the 1933 Act, and such registration is in full
force and effect.
(j) To the knowledge of such counsel, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to the Northstar Trust or the Acquiring
Fund or any of their respective properties or assets and neither the
Northstar Trust nor the Acquiring Fund is a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business other than as
previously disclosed in the N-14 Registration Statement.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Northstar Trust at
which the contents of the N-14 Registration Statement and Reorganization Proxy
Materials and related matters were discussed, and, although they are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the N-14 Registration Statement and
Reorganization Proxy Materials (except to the extent indicated in paragraph (f)
of their opinion), on the basis of the foregoing (relying as to materiality to a
large extent upon the opinions of officers and other representatives of the
Northstar Trust), no facts have come to their attention that lead them to
believe that the N-14 Registration Statement and Reorganization Proxy Materials
as of their respective dates, as of the date of the Shareholders Meeting, and as
of the Closing Date, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein regarding the Northstar
Trust or the Acquiring Fund or necessary to make the statements therein
regarding the Northstar Trust or the Acquiring Fund, in the light of the
circumstances under which they were made, not misleading. Such opinion may state
that such counsel does not express any opinion or belief as to the financial
statements or other financial data, or as to the information relating to the
Brandes Trust or Acquired Fund, contained in the N-14 Registration Statement and
Reorganization Proxy Materials, and that such opinion is solely for the benefit
of the Acquired Fund, the Brandes Trust, its Trustees and its officers. Such
opinion shall also include such other matters incident to the transaction
contemplated hereby as the Brandes Trust reasonably requests.
In this paragraph 6.4, references to the N-14 Registration Statement and
Reorganization Proxy Materials include and relate only to the text of such N-14
Registration Statement and Reorganization Proxy Materials and not to any
exhibits or attachments thereto or to any documents incorporated by reference
therein.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NORTHSTAR TRUST
The obligations of the Northstar Trust to complete the transaction provided
for herein shall be subject, at its election, to the performance by the Brandes
Trust of all of the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following further conditions:
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7.1 All representations and warranties of the Brandes Trust with respect to
the Acquired Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date.
7.2 The Brandes Trust shall have delivered to the Northstar Trust a
statement of assets and liabilities of the Acquired Fund, together with a list
of the portfolio securities of the Acquired Fund showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer or Assistant Treasurer of the Brandes Trust as
having been prepared in accordance with generally accepted accounting principles
consistently applied.
7.3 The Brandes Trust shall have duly executed and delivered to the
Northstar Trust such bills of sale, assignments, certificates and other
instruments of transfer ("Transfer Documents") as the Northstar Trust may deem
necessary or desirable to transfer all of the Brandes Trust's right, title and
interest in and to the Acquired Fund's assets. The Acquired Fund's assets shall
be accompanied by all necessary state stock transfer stamps or cash for the
appropriate purchase price therefor.
7.4 The Brandes Trust shall have delivered to the Northstar Trust on the
Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Northstar Trust and dated as of the Closing Date, to the
effect that the representations and warranties of the Brandes Trust with respect
to the Acquired Fund made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Northstar
Trust shall reasonably request.
7.5 The Brandes Trust shall have performed and complied in all material
respects with each of its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the Closing Date.
7.6 The Northstar Trust shall have received on the Closing Date the opinion
of Paul, Hastings, Janofsky & Walker LLP, counsel to the Brandes Trust, covering
the following points:
(a) The Brandes Trust is a business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has the power to own all of its properties and assets, including those of
the Acquired Fund, and to carry on its business, including that of the
Acquired Fund, as presently conducted.
(b) The Agreement has been duly authorized, executed and delivered by
the Brandes Trust on behalf of the Acquired Fund, and, assuming that the
N-14 Registration Statement and the Reorganization Proxy Materials comply
with the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and, assuming due authorization, execution and
delivery of the Agreement by the Northstar Trust, is a valid and binding
obligation of the Brandes Trust on behalf of the Acquired Fund enforceable
against the Brandes Trust in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and to general
equity principles.
(c) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not, result in a
material violation of the Brandes Trust's Declaration of Trust or By-Laws
or any provision of any agreement (known to such counsel) to which the
Brandes Trust is a party or by which it is bound or, to the knowledge of
such counsel, result in the acceleration of any obligation or the
imposition of any penalty under any agreement, judgment, or decree to which
the Brandes Trust is a party or by which it is bound.
(d) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or the State of Delaware is required for the consummation by the
Acquired Fund of the transaction contemplated herein, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such
as may be required under state securities laws.
(e) Only insofar as they relate to the Brandes Trust and the Acquired
Fund, the descriptions in the N-14 Registration Statement and
Reorganization Proxy Materials of statutes, legal and governmental
proceedings and contracts and other documents, if any, are accurate and
fairly present the information required to be shown.
(f) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Brandes Trust and the
Acquired Fund, existing on or before the effective date of the N-14
Registration Statement or the Closing Date required to be described in the
Reorganization Proxy Materials or to be filed as exhibits to the N-14
Registration Statement which are not described as required.
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(g) The Brandes Trust is registered as an investment company under the
1940 Act and its registration with the Commission as an investment company
under the 1940 Act with respect to each series of shares it offers,
including those of the Acquired Fund, is in full force and effect.
(h) To the knowledge of such counsel, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to the Brandes Trust or the Acquired
Fund or any of their respective properties or assets and neither the
Brandes Trust nor the Acquired Fund is a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business other than as
previously disclosed in the Reorganization Proxy Materials.
Such counsel shall also state that they have participated in conferences
with officers and other representatives of the Brandes Trust at which the
contents of the N-14 Registration Statement and Reorganization Proxy Materials
and related matters were discussed and, although they are not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the N-14 Registration Statement and Reorganization
Proxy Materials (except to the extent indicated in paragraph (e) of their
opinion), on the basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers and other representatives of the Brandes
Trust), no facts have come to their attention that lead them to believe that the
N-14 Registration Statement and Reorganization Proxy Materials as of their
respective dates, as of the date of the Shareholders Meeting, and as of the
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein regarding the Brandes Trust
or the Acquired Fund or necessary to make the statements therein regarding the
Brandes Trust or the Acquired Fund, in light of the circumstances under which
they were made, not misleading. Such opinion may state that such counsel does
not express any opinion or belief as to the financial statements or other
financial data, or as to the information relating to the Northstar Trust or the
Acquiring Fund, contained in the N-14 Registration Statement and Reorganization
Proxy Materials and that such opinion is solely for the benefit of the Acquiring
Fund, the Northstar Trust, its Trustees and its officers. Such opinion shall
also include such other matters incident to the transaction contemplated hereby
as the Northstar Trust may reasonably request.
In this paragraph 7.6, references to the N-14 Registration Statement and
Reorganization Proxy Materials include and relate to only the text of such N-14
Registration Statement and Reorganization Proxy Materials and not to any
exhibits or attachments thereto or to any document incorporated by reference
therein.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NORTHSTAR TRUST AND THE
BRANDES TRUST
If any of the conditions set forth below do not exist on or before the
Closing Date, either party to this Agreement shall, at its option, not be
required to consummate the transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of the Brandes Trust's
Declaration of Trust and certified copies of the resolutions evidencing such
approval shall have been delivered to the Northstar Trust.
8.2 On the Closing Date no action, suit or other proceeding shall be
threatened or pending before any court or governmental agency which seeks to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transaction contemplated herein.
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Northstar Trust or the Brandes Trust to permit consummation, in all material
respects, of the transaction contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund.
8.4 The N-14 Registration Statement shall have become effective under the
1933 Act and no stop orders suspending such effectiveness shall have been
instituted or, to the knowledge of either party, contemplated by the Commission
and the parties shall have received all permits and other authorizations
necessary under state securities laws to consummate the transaction contemplated
by this Agreement.
8.5 The parties shall have received the opinion of Dechert Price & Rhoads
addressed to the Northstar Trust and the Brandes Trust substantially to the
effect that for federal income tax purposes:
(a) The transfer by the Acquired Fund of all of its assets to the
Acquiring Fund in exchange for Acquiring Fund Shares, and the distribution
of such shares to the Acquired Fund Shareholders, as provided in this
Agreement, will constitute a reorganization within the meaning of Section
368 of the Code.
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<PAGE>
(b) In accordance with Sections 361(a), 361(c)(1) and 357(a) of the
Code, no gain or loss will be recognized by the Acquired Fund as a result
of such transactions.
(c) In accordance with Section 1032(a) of the Code, no gain or loss
will be recognized by the Acquiring Fund as a result of such transactions.
(d) In accordance with Section 354(a)(1) of the Code, no gain or loss
will be recognized by the shareholders of the Acquired Fund on the
distribution to them by the Acquired Fund of the Acquiring Fund Shares in
exchange for their shares of the Acquired Fund.
(e) In accordance with Section 358(a)(1) of the Code, the basis of the
Acquiring Fund Shares received by each shareholder of the Acquired Fund
will be the same as the basis of the shareholder's Acquired Fund shares
immediately prior to such transactions.
(f) In accordance with Section 362(b) of the Code, the basis of the
Acquired Fund Assets received by the Acquiring Fund will be the same as the
basis of such assets in the hands of the Acquired Fund immediately prior
the transactions.
(g) In accordance with Section 1223(1) of the Code, a shareholder's
holding period for the Acquiring Fund Shares will be determined by
including the period for which the shareholder held the shares of the
Acquired Fund exchanged therefor, provided that the shareholder held such
shares of the Acquired Fund as a capital asset.
(h) In accordance with Section 1223(2) of the Code, the holding period
of the Acquiring Fund with respect to the Acquired Fund Assets will include
the period for which such Assets were held by the Acquired Fund provided
that the Acquired Fund held such Assets as capital assets.
(i) In accordance with Section 381(a) of the Code, the Acquiring Fund
will succeed to the tax attributes of the Acquired Fund described in
Section 381(c) of the Code.
8.6 No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to restrain or
prohibit or obtain damages or other relief in connection with this Agreement or
the transactions contemplated herein.
8.7 The Commission shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
enjoin consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act.
8.8 Either party, at its option, may waive compliance by the other party
with any condition contained in this Section 8, other than the conditions
contained in Sections 8.1 and 8.4.
9. BROKERAGE FEES
The Northstar Trust on behalf of the Acquiring Fund and the Brandes Trust
on behalf of the Acquired Fund each represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Northstar Trust and the Brandes Trust agree that neither party has
made any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
11. FURTHER ASSURANCES
Subject to the terms and conditions herein provided, each of the parties
hereto shall use its best efforts to take, or cause to be taken, such action, to
execute and deliver, or cause to be executed and delivered, such additional
documents and instruments and to do, or cause to be done, all things necessary,
proper or advisable under the provisions of this Agreement and under applicable
law to consummate and make effective the transactions contemplated by this
Agreement, including without limitation delivering and/or causing to be
delivered to the other party hereto each of the items required under this
Agreement as a condition to such party's obligations hereunder. In addition, the
Brandes Trust shall deliver or cause to be
A-11
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delivered to the Northstar Trust or its designees each account, book, record or
other document of the Acquired Fund required to be maintained by Section 31(a)
of the 1940 Act and Rules 31a-1 to 31a-3 thereunder (regardless of whose
possession they are in).
12. TERMINATION
This Agreement may be terminated by a party at or, in the case of
Subsection 12(c) below, at any time prior to, the Closing Date by a vote of a
majority of its Board of Trustees as provided below:
(a) By the Acquired Fund if the conditions set forth in Section 6 or 8 are
not satisfied as specified in said Section;
(b) By the Acquiring Fund if the conditions set forth in Section 7 or 8 are
not satisfied as specified in said Section;
(c) By the Northstar Trust or the Brandes Trust if determined by its Board
of Trustees that proceeding with the transactions contemplated herein
is inadvisable; and
(d) By mutual consent.
13. AMENDMENTS
This agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the Brandes
Trust and the Northstar Trust; provided, however, that following the meeting of
the Acquired Fund Shareholders called by the Brandes Trust, no such amendment
may have the effect of changing the provisions for determining the number of the
Acquiring Fund Shares to be issued to the Acquired Fund Shareholders under this
Agreement to the detriment of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Northstar Trust, Two
Pickwick Plaza, Greenwich, Connecticut 06830, Attention: President, with a copy
to Dechert Price & Rhoads, 1500 K Street, N.W., Washington, DC 20005, Attention:
Jeffrey L, Steele, or to the Brandes Trust, 12750 High Bluff Drive, San Diego,
California 92130, Attention: President, with a copy to Paul, Hastings, Janofsky
& Walker LLP, 555 South Flower Street, Los Angeles, California 90071, Attention:
Michael Glazer.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
15.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
15.5 It is expressly agreed that the obligations of the Brandes Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Brandes Trust personally, but bind only
the trust property of the Acquired Fund as provided in the Declaration of Trust
of the Brandes Trust. The execution and delivery by such officers shall not be
deemed to have been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the trust property of the
Acquired Fund as provided in the Declaration of Trust of the Brandes Trust.
15.6 It is expressly agreed that the obligations of the Northstar Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Northstar Trust personally, but bind only
the trust property of the Acquiring Fund, as provided in the Declaration of
Trust of the Northstar Trust. The execution and delivery by such officers shall
not be deemed to have been made by any of them individually or to impose any
liability on any of them
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personally, but shall bind only the trust property of the Acquiring Fund as
provided in the Declaration of Trust of the Northstar Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President.
ATTEST: NORTHSTAR TRUST
on behalf of the
NORTHSTAR INTERNATIONAL VALUE FUND
/s/ Jennifer B. McHugh By: /s/ Mark L. Lipson
ATTEST: BRANDES TRUST
on behalf of
BRANDES INTERNATIONAL FUND
/s/ Gerald W. Wheeler By: /s/ Barry G. O'Neil
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EXHIBIT B
NORTHSTAR INTERNATIONAL VALUE FUND
TWO PICKWICK PLAZA (203) 863-6200
GREENWICH, CONNECTICUT 06830 (800) 595-7827
FEBRUARY 28, 1997
Northstar International Value Fund (the "Fund") is a separate diversified
portfolio of Northstar Trust, an open-end, management investment company (the
"Trust"), known as a mutual fund. The Fund's investment objective is long-term
capital appreciation. It will seek to achieve this objective by primarily
investing in equity securities of foreign issuers with market capitalizations
greater than $1 billion.
Northstar Investment Management Corporation ("Northstar" or the "Adviser")
is the investment adviser for the Fund. Brandes Investment Partners, L.P.
("Brandes" or the "Sub-adviser") is the sub-adviser or manager of the Fund's
assets. Northstar Distributors, Inc. (the "Underwriter") is the underwriter of
the Fund's shares, and Northstar Administrators Corporation (the
"Administrator") serves as administrator to the Fund. The Underwriter and
Administrator are each affiliates of the Adviser.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
February 28, 1997, has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The Statement of Additional Information
is available without charge upon request to Northstar at the address or
telephone number given above.
Mutual funds are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured or guaranteed by the FDIC, the
Federal Reserve Board, or any other government agency. Investment in mutual
funds involves risks, including possible loss of principal.
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.
B-1
<PAGE>
EXPENSE INFORMATION
The tables and examples below are designed to assist you in understanding
the various costs and expenses that you will bear directly or indirectly as an
investor in the Fund. Shareholder Transaction Expenses are paid by investors
when purchasing or redeeming Fund shares. Annual Operating Expenses are paid by
the Fund and are reflected in the Fund's net asset value.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-end Sales Load Imposed on Purchase of Shares
(as a % of offering price)................................................................ 4.75% None None
Maximum Contingent Deferred Sales Load on Sale of Shares
(as a % of the lesser of original price or redemption proceeds)........................... None(1) 5.00%(2) 1.00%
ANNUAL FUND OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
Management Fee.............................................................................. 1.00% 1.00% 1.00%
12b-1 Expenses(3)........................................................................... 0.30% 1.00% 1.00%
Other Expenses.............................................................................. 0.50% 0.50% 0.50%
Total Fund Operating Expenses after reimbursement(4)........................................ 1.80% 2.50% 2.50%
</TABLE>
(1) Purchases of $1 million or more are not subject to an initial sales charge;
however, a CDSC of up to 1% will be imposed on such purchases in the event
of certain redemption transactions within 18 months following the date of
purchase.
(2) The Class B CDSC on redemptions decreases 1% annually after year one to 2%
in years four and five and to 0% after year five.
(3) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers, Inc. ("NASD") rules regarding investment companies.
(4) The Adviser, Administrator and Sub-adviser have agreed to waive any
management, administrative and sub-advisory fees until the net assets of the
Fund exceed $50 million. The table assumes that the net assets of the Fund
will exceed that amount approximately 3 months after the Reorganization. In
the absence of this agreement, "Total Fund Operating Expenses" would have
been estimated to be 2.15% of average net assets for Class A shares, 2.85%
of average net assets for Class B shares and 2.85% of average net assets for
Class C shares.
Examples: An investor in the Fund would pay the following expenses on a
$1,000 investment assuming a 5% annual return throughout the period, and, unless
otherwise noted, redemption at the end of each period.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS B(1) CLASS C
<S> <C> <C> <C> <C>
1 Year..................................................................... $ 65 $ 77 $ 26 $ 35
3 Years.................................................................... 103 112 79 78
5 Years.................................................................... 143 158 136 133
10 Years................................................................... 254 289(2) 289(2) 284
<CAPTION>
CLASS C(1)
<S> <C>
1 Year..................................................................... $ 25
3 Years.................................................................... 78
5 Years.................................................................... 133
10 Years................................................................... 284
</TABLE>
(1) Assumes no redemption.
(2) Class B shares convert to Class A Shares after year 8. This figure uses
Class A expenses for years 9 and 10.
The amounts listed in the Example should not be considered a representation
of past or future expenses and actual expenses may be greater or less than those
shown.
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
The Fund's investment objective is long-term capital appreciation. It
cannot be changed without the approval by the holders of a majority (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act") of the Fund's
outstanding voting shares. There can be no assurance that the Fund's investment
objective will be achieved.
The Fund invests primarily in equity securities of foreign issuers with
market capitalizations greater than $1 billion. The Fund may invest up to 25% of
its total assets in small capitalization companies. Small capitalization
companies are those with capitalization of $1 billion or less. Investments in
small capitalization companies while generally providing greater growth
potential than investments in companies with larger capitalizations, also entail
greater risks. Small capitalization companies
B-2
<PAGE>
often have limited product lines, markets or financial resources and may be
dependent on one person or a few key persons for management. The securities of
such companies may be subject to more volatile market movements than securities
of larger, more established companies, both because the securities typically are
traded in lower volume and because the issuers typically are more subject to
changes in earnings and prospects. Because the Fund applies a U.S. size standard
on a global basis, it may invest in issuers which might, in some countries, rank
among the largest companies in terms of capitalization.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of issuers located in at least three countries other
than the United States. Countries in which the Fund may invest include, but are
not limited to, the nations of Western Europe, North and South America,
Australia and Asia. Equity securities include common stocks, preferred stocks
and securities convertible into common stocks. It is anticipated that securities
generally will be purchased in the form of common stock, American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") or Global Depositary
Receipts ("GDRs"). ADRs, EDRs and GDRs, which may be sponsored or unsponsored,
are receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying foreign securities. The issuers of securities
underlying unsponsored ADRs, EDRs and GDRs are not obligated to disclose
material information in the United States and, accordingly, there may not be a
correlation between such information and the market value of the Depositary
Receipts.
The Fund may invest up to 25% of its assets in securities of companies
located in countries with emerging securities markets. Emerging markets are the
capital markets of any country that in the opinion of the Adviser is generally
considered a developing country by the international financial community. See
"Investment Considerations and Risk Factors -- Foreign Securities".
In seeking out foreign securities for purchase, the Advisor does not
attempt to match the security allocations of foreign stock market indices.
Therefore, the Fund's country weightings may differ significantly from country
weightings found in published foreign stock indices. For example, the Advisor
may choose not to invest a Fund's assets in a country whose stock market, at any
given time, may comprise a large portion of a published foreign stock market
index. At the same time, the Advisor may invest a Fund's assets in countries
whose representation in such an index may be small or non-existent. The Advisor
selects stocks for each Fund based on their individual merits and not
necessarily on their geographic locations.
INVESTMENT CONSIDERATIONS AND RISK FACTORS
The Fund's net asset value per share is expected to fluctuate. Investors
should consider the Fund as a supplement to an overall investment program and
should invest only if they are willing to undertake the risks involved.
EQUITY SECURITIES. Equity securities can over time rise and fall in value,
often based on factors unrelated to the value of the issuer of the securities,
and such fluctuations can be pronounced. Changes in the value of the Fund's
investments will result in changes in the value of the Fund's shares and thus
its total return to investors.
The securities of smaller companies in which the Fund may invest may be
subject to more abrupt or erratic market movements than larger more established
companies, because these securities typically are traded in lower volume and the
issuers typically are subject to a greater degree to changes in earnings and
prospects.
FOREIGN SECURITIES. Investing in foreign securities involves special risks.
These include currency fluctuations, political or economic instability in the
country of issue and the possible imposition of exchange controls or other laws
or restrictions. In addition, securities prices in foreign markets are generally
subject to different economic, financial, political and social factors than are
the prices of securities in U.S. markets. With respect to some foreign countries
there may be the possibility of expropriation or confiscatory taxation,
limitations on liquidity of securities or political or economic developments
which could affect the foreign investments of the Funds.
Further, securities of foreign issuers generally will not be registered
with the SEC, and such issuers will generally not be subject to the SEC's
reporting requirements. Accordingly, there is likely to be less publicly
available information concerning certain of the foreign issuers of securities
held by the Fund than is available concerning U.S. companies. Foreign companies
are also generally not subject to uniform accounting, auditing and financial
reporting standards or to practices and requirements comparable to those
applicable to U.S. companies. There may also be less government supervision and
regulation of foreign broker-dealers, financial institutions and listed
companies than exists in the U.S. These factors could make foreign investments,
especially those in developing countries, more volatile.
Investing in emerging securities markets involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
markets countries may have fixed or managed currencies that are not
free-floating against the U.S. dollar. Further, certain currencies may not be
traded internationally. Certain of these currencies have experienced a
B-3
<PAGE>
steady devaluation relative to the U.S. dollar. Any devaluations in the
currencies in which the Fund's portfolio securities are denominated may have a
detrimental impact on the Fund.
Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base, governmental controls and investment restrictions that are subject to
political change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries.
Emerging securities markets typically have substantially less volume than
U.S. markets, and securities in many of such markets are less liquid, and their
prices often are more volatile than securities of comparable U.S. companies.
Such markets often have different clearance and settlement procedures for
securities transactions, and in some markets there have been times when
settlements have been unable to keep pace with the volume of transactions,
making it difficult to conduct transactions. Delays in settlement could result
in temporary periods when assets which the Fund desires to invest in emerging
markets may be uninvested. Settlement problems in emerging markets countries
also could cause the Fund to miss attractive investment opportunities.
Satisfactory custodial services may not be available in some emerging markets
countries, which may result in the Fund incurring additional costs and delays in
the transportation and custody of such securities.
OTHER INVESTMENT TECHNIQUES
The Fund may, but does not currently intend to, engage in certain
additional investment techniques not described in the Prospectus. These
techniques and additional information on the securities and techniques described
in the Prospectus are contained in the Statement of Additional Information.
SHORT-TERM INVESTMENTS. At times the Fund may invest in short-term cash
equivalent securities either for temporary, defensive purposes, or as part of
its overall investment strategy. These securities consist of high quality debt
obligations maturing in one year or less from the date of purchase, such as U.S.
Government securities, certificates of deposit, bankers' acceptances and
commercial paper. High quality means the obligations have been rated at least
A-1 by Standard & Poor's Corporation ("S&P") or Prime-1 by Moody's Investor's
Service, Inc. ("Moody's"), have an outstanding issue of debt securities rated at
least AA by S&P or Aa by Moody's, or are of comparable quality in the opinion of
the Sub-adviser.
REPURCHASE AGREEMENTS. Short-term investments also include repurchase
agreements with respect to the high quality debt obligations listed above. A
repurchase agreement is a transaction in which the Fund purchases a security
and, at the same time, the seller (normally a commercial bank or broker-dealer)
agrees to repurchase the same security (and/or a security substituted for it
under the repurchase agreement) at an agreed-upon price and date in the future.
The resale price is in excess of the purchase price in that it reflects an
agreed-upon market interest rate effective for the period of time during which
the Fund holds the securities. The majority of these transactions run from day
to day and not more than seven days from the original purchase. The Fund's risk
is limited to the ability of the seller to pay the agreed- upon sum on the
delivery date; in the event of bankruptcy or the default by the seller, there
may be possible delays and expenses in liquidating the instrument purchased,
decline in its value and loss of interest. The securities will be marked to
market every business day so that their value is at least equal to the amount
due from the seller, including accrued interest. The Sub-adviser will also
consider the credit-worthiness of any bank or broker-dealer involved in
repurchase agreements under procedures adopted by the Board of Trustees.
U.S. GOVERNMENT SECURITIES. The Fund may invest in securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities. U.S.
Government securities include direct obligations issued by the United States
Treasury, such as Treasury bills, certificates of indebtedness, notes and bonds.
U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Home Loan Banks, the
Federal National Mortgage Association, and the Student Loan Marketing
Association. Except for U.S. Treasury securities, obligations of U.S. Government
agencies and instrumentalities may or may not be supported by the full faith and
credit of the United States. Some, such as those of the Federal Home Loan Banks,
are backed by the right of the issuer to borrow from the Treasury, others by
discretionary authority of the U.S. Government to purchase the agencies'
obligations, while still others, such as the Student Loan Marketing Association,
are supported only by the credit of the instrumentality. In the case of
securities not backed by the full faith and credit of the United States, the
investor must look principally to the agency issuing or guaranteeing the
obligation
B-4
<PAGE>
for ultimate repayment and may not be able to assert a claim against the United
States itself in the event the agency or instrumentality does not meet its
commitment.
WHEN-ISSUED SECURITIES. The Fund may purchase securities on a when-issued
or delayed-delivery basis, generally in connection with an underwriting or other
offering. When-issued and delayed-delivery transactions occur when securities
are bought with payment for and delivery of the securities scheduled to take
place at a future time, beyond normal settlement dates, generally from 15 to 45
days after the transaction. No interest accrues to the purchaser during the
period before delivery. There is a risk in these transactions that the value of
the securities at settlement may be more or less than the agreed upon price, or
that the party with which the Fund enters into such a transaction may not
perform its commitment. The Fund will segregate liquid assets, such as cash,
U.S. Government securities and other liquid, high quality debt securities in an
amount sufficient to meet its payment obligations with respect to these
transactions.
SECURITIES LENDING. The Fund may lend its securities in an amount not
exceeding 30% of its assets to financial institutions such as banks and brokers
if the loan is collateralized in accordance with applicable regulations. Under
the present regulatory requirements which govern loans of portfolio securities,
the loan collateral must, on each business day, at least equal the value of the
loaned securities and must consist of cash, letters of credit of domestic banks
or domestic branches of foreign banks, or securities of the U.S. Government.
Loans of securities involve risks of delay in receiving additional collateral or
in recovering the securities loaned or even loss of rights in the collateral
should the borrower of the securities fail financially. However, such securities
lending will be made only when, in the opinion of the Sub-adviser, the income to
be earned from the loans justifies the attendant risks. Loans are subject to
termination at the option of the Fund or the borrower.
OPTIONS. The Fund may write (sell) covered call options on individual
securities and on stock indices and engage in related closing transactions. A
covered call option on a security is an agreement by the Fund, in exchange for a
premium, to sell a particular portfolio security if the option is exercised at a
specified price before a set date. An option on a stock index gives the option
holder the right to receive, upon exercising the option, a cash settlement
amount based on the difference between the exercise price and the value of the
underlying stock index. Risks associated with writing covered options include
the possible inability to effect closing transactions at favorable prices and an
appreciation limit on the securities set aside for settlement. The Fund may also
purchase call options in closing transactions, to terminate option positions
written by the Fund. There is no assurance of liquidity in the secondary market
for purposes of closing out covered call option positions.
The Fund may purchase put and call options with respect to securities which
are eligible for purchase by the Fund and with respect to various stock indices
for the purpose of hedging against the risk of unfavorable price movements
adversely affecting the value of the Fund's securities or securities the Fund
intends to buy. A put option on a security is an agreement by the writer of the
option, in exchange for a premium, to purchase the security from the Fund, if
the option is exercised, at a specified price before a set date. The Fund may
also sell put and call options in closing transactions.
Special risks are associated with the use of options. There can be no
guarantee of a correlation between price movements in the option and in the
underlying securities or index. A lack of correlation could result in a loss on
both the Fund's portfolio holdings and the option so that the Fund's return
might have been better had the option not been purchased or sold. There can be
no assurance that a liquid market will exist at a time when the Fund seeks to
close out an option position. The Fund may purchase a put or call option only if
the value of its premium, when aggregated with the premiums on all other options
held by the Fund, does not exceed 5% of the Fund's total assets.
STOCK INDEX FUTURES. The Fund may buy and sell stock index futures
contracts for bona fide hedging purposes, e.g., in order to hedge against
changes in prices of the Fund's securities. No more than 25% of the Fund's
assets will be hedged.
A stock index futures contract is an agreement pursuant to which one party
agrees to deliver to the other an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of securities is made. If the
Sub-adviser expected general stock market prices to rise, it might purchase a
stock index futures contract as a hedge against an increase in prices of
particular equity securities it wanted ultimately to buy. If in fact the stock
index did rise, the price of the equity securities intended to be purchased
might also increase, but that increase would be offset in part by the increase
in the value of the Fund's futures contract resulting from the increase in the
index. On the other hand, if the Sub-adviser expected general stock market
prices to decline, it might sell a futures contract on the index. If that index
did in fact decline, the value of some or all of the equity securities held by
the Fund might also be expected to decline, but that decrease would be offset in
part by the increase in the value of the futures contract.
There is no assurance that it will be possible at any particular time to
close a futures position. In the event that the Fund could not close a futures
position and the value of the position declined, the Fund would be required to
continue to make
B-5
<PAGE>
daily cash payments to the other party to the contract to offset the decline in
value of the position. There can be no assurance that hedging transactions will
be successful, as there may be an imperfect correlation between movements in the
prices of the futures contracts and of the securities being hedged, or price
distortions due to market conditions in the futures markets. Successful use of
futures contracts is subject to the Sub-adviser's ability to predict correctly
movements in the direction of interest rates, market prices and other factors
affecting the value of securities.
ILLIQUID AND RESTRICTED SECURITIES; SHORT SALES AGAINST THE BOX. The Fund
may invest up to 5% of its total assets in illiquid securities, including (i)
securities for which there is no readily available market; (ii) securities which
may be subject to legal restrictions on resale (so-called "restricted
securities") other than Rule 144A securities noted below; (iii) repurchase
agreements having more than seven days to maturity; and (iv) fixed time deposits
subject to withdrawal penalties (other than those with a term of less than seven
days). Illiquid securities do not include those which meet the requirements of
Securities Act Rule 144A and which the Sub-adviser has determined to be liquid
based on guidelines approved by the Board of Trustees. The Fund is also
permitted to engage in short sales "against the box." Such short sales are a
method of locking in unrealized capital gains without current recognition of
such gains.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, average annual total return and/or cumulative
total return.
Current yield shows the rate of income a Fund earns on its investments as a
percentage of the Fund's share price. It is calculated by dividing a Fund's net
investment income for a 30-day period by the average number of shares entitled
to receive dividends and dividing the result by the Fund's share price at the
end of the 30-day period. Yield does not include changes in share price.
Yields are calculated according to standardized SEC formulas and may not
equal the income on an investor's account. Yield is usually quoted on an
annualized basis. An annualized yield represents the amount you would earn if
you remained in a Fund for a year and that Fund continued to have the same yield
for the entire year.
Average annual total return represents the average annual percentage change
of an investment over a specified period. It is calculated by taking the
cumulative total return for the stated period and determining what constant
annual return would have produced the same cumulative return. Average annual
total returns tend to smooth out variations in a Fund's return and are not the
same as actual annual results.
Cumulative total return represents the actual rate of return on an
investment for a specified period. Cumulative total return is generally quoted
for more than one year (e.g., the life of the Fund). A cumulative total return
does not show interim fluctuations in the value of an investment.
Fund performance figures are based on historical results and are not
intended to indicate future performance. Investment returns and share price will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Comparative performance information may be used in
advertising, including data from Lipper Analytical Services, Inc., Moody's Bond
Survey Bond Index, Morningstar, Inc. and other industry publications.
HOW NET ASSET VALUE IS DETERMINED
All purchases, redemptions and exchanges are processed at the net asset
value ("NAV") per share next calculated after your request is received. In order
to receive a day's price, your order must be received by 4:00 p.m. Eastern
Standard Time ("EST"). The Fund's NAV is determined separately for each class as
of the close of regular trading on the New York Stock Exchange ("NYSE")
(normally 4:00 p.m. EST) each day that the NYSE is open. NAV per share is
calculated by dividing the total value of the Fund's securities and other
assets, less all liabilities, by the total number of shares outstanding. The
specific expenses borne by each class of shares will be deducted from that class
and will result in different NAVs and dividend payments. The NAV of a Class B,
or Class C share will generally be lower than that of a Class A share because of
the higher distribution fees or certain other class specific expenses borne by
these classes. 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 adopted by and under the supervision of the Trustees. Money market
instruments maturing within 60 days are valued at amortized cost, which
approximates market value. See "Net Asset Value" in the Statement of Additional
Information.
B-6
<PAGE>
MANAGEMENT OF THE FUND
THE TRUSTEES. The Trustees of the Fund oversee the business affairs of the
Fund and are responsible for major decisions relating to the Fund's investment
objective and policies. The Trustees delegate the day-to-day management of the
Fund to the officers of the Trust and meet quarterly to review the Fund's
investment policies, performance, expenses and other business affairs.
THE INVESTMENT ADVISER AND AFFILIATED SERVICE PROVIDERS. Northstar
Investment Management Corporation is the investment adviser to the Fund.
Northstar maintains the overall responsibility of overseeing the investment
management provided by the Sub-adviser. Northstar Administrators Corporation
("NAC"), an affiliate of Northstar, furnishes certain administrative, compliance
and accounting services to the Fund. Employees of Northstar and NAC serve as
officers of the Fund, and Northstar provides office space for the Fund and pays
the salaries of all Fund officers and Trustees who are affiliated with
Northstar. Northstar Distributors, Inc, also an affiliate of Northstar, serves
as principal underwriter of the shares of the Fund, conducting 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 through investment
dealers.
Northstar and its affiliates are indirect, majority owned subsidiaries of
ReliaStar Financial Corporation ("ReliaStar"). ReliaStar's address is 20
Washington Avenue South, Minneapolis, Minnesota 55401. Combined minority
interests of Northstar held by members of senior management currently equal 20%.
ReliaStar is a publicly traded holding company whose subsidiaries specialize in
the life and health insurance business. Through ReliaStar Life Insurance Company
and other subsidiaries, ReliaStar issues and distributes individual life
insurance, annuities and mutual funds, group life and health insurance and life
and health reinsurance, and provides related investment management services.
Under the terms of an investment advisory agreement between Northstar and
the Fund, the Fund has agreed to pay Northstar a monthly fee at the annual rate
of 1.00% of the Fund's average daily net assets.
The Fund pays NAC an administrative services fee, which is accrued daily
and paid monthly, at the annual rate of 0.10% of the Fund's average net assets.
NAC also charges an annual account service fee of $5.00 for each account of
beneficial holders of shares in the Fund for providing certain shareholder
services and assisting broker-dealers in servicing Fund accounts.
From time to time, Northstar may waive receipt of its fees or voluntarily
assume certain expenses of the Fund. In this connection, Northstar, NAC and
Brandes Investment Partners, L.P. have agreed to waive any management,
administrative and sub-advisory fees until the net assets of the Fund exceed $50
million. Thereafter, if the assets were to decrease below $50 million,
Northstar, NAC and Brandes may determine again to waive some or all of their
fees, although they are not required to do so.
THE SUB-ADVISER. Brandes Investment Partners, L.P. ("Brandes"), a
registered investment adviser, serves as the sub-adviser to the Fund pursuant to
a Subadvisory Agreement between Northstar and Brandes. Brandes' principal
address is 12750 High Bluff Drive, San Diego, California 92130. Brandes was
organized in May 1996 as the successor to its general partner, Brandes
Investment Partners, Inc. Charles Brandes, who owns a controlling interest in
Brandes' general partner, serves as one of the managing partners of Brandes.
Brandes currently manages in excess of $10 billion for private accounts. Brandes
will receive from Northstar, not the Fund, a monthly fee for its services at an
annual rate equal to 50% of the management fee that the Fund pays Northstar.
Northstar is responsible for overseeing the investment management provided by
Brandes, and assumes all cost and expenses of the subadvisory arrangement.
PORTFOLIO MANAGERS. The Fund is team-managed by Brandes' Investment
Committee, whose members are Brandes principals and/or portfolio managers.
Current members of the Investment Committee are Charles H. Brandes, CFA; Walter
J. Brown, CFA; Jeffrey A. Busby, CFA; Glenn R. Carlson, CFA; Douglas G. Edman,
CFA; Robert J. Gallagher; Ann W. Humphreville; Marnelle A. Marchese, CFA;
Jeffrey R. Meyer, CFA; William A. Pickering, CFA; Ann M-Priebe; and Brent V.
Woods, J.D.
VALUE INVESTING. The Sub-adviser is committed to the use of the Graham and
Dodd value investing approach as introduced in the classic book Security
Analysis. Utilizing this philosophy, the Sub-adviser views stocks as parts of
businesses which are for sale. It seeks to purchase a diversified group of these
businesses at prices its research indicates are well below their true long-term,
or intrinsic, value. By purchasing stocks whose current prices are believed to
be considerably below their intrinsic value, the Sub-adviser believes it can buy
not only a possible margin of safety against price declines, but also an
attractive opportunity for profit over the business cycle.
B-7
<PAGE>
In estimating a company's true long-term value, the Sub-adviser uses
sources of information such as company reports, filings with the Securities and
Exchange Commission (the "SEC") (if available), computer databases, industry
publications, general and business publications, brokerage firm research
reports, and interviews with company management. The Sub-adviser's analysis is
focused on fundamental characteristics of a company, including, but not limited
to, book value, cash flow and capital structure, as well as management's record
and broad industry issues. Once the intrinsic value of a company is estimated,
this value is compared to the price of the stock. If the price is substantially
lower than the estimated intrinsic value, the stock may be purchased. The
Sub-adviser believes that the margin between current price and intrinsic value
should provide a margin of safety against price declines. In addition, over a
business cycle of three to five years, the Sub-adviser believes the market
should begin to recognize the company's value and drive its price up toward its
intrinsic value. As a result, the investor could realize profits. Of course,
there can be no assurance that companies selected using the value investing
approach will generate profits or that the Sub-adviser's assessment of company
value will be correct.
Set forth below is certain performance information provided by the
Sub-adviser relating to historical performance of a composite of international
equity accounts of clients of the Sub-adviser, and to historical performance of
the Brandes International Fund series of Brandes Investment Trust (the assets of
which were acquired by the Fund when the Fund commenced operations).
The international equity accounts in the Sub-adviser's composite had the
same investment objective as the Fund and were managed by the same team that
will manage the Fund's securities, using substantially similar, though not
identical, investment strategies, policies and techniques as those contemplated
for use by the Fund. This information is provided to illustrate the past
performance of the Sub-adviser in managing similar accounts, as measured against
the Morgan Stanley Capital International (MSCI) EAFE Index, a standard
international equity investment benchmark. The accounts that are included in the
Sub-adviser's composite are not subject to the same types of expenses to which
the Fund is subject nor the diversification requirements, specific tax
restrictions and investment limitations imposed on the Fund by the Investment
Company Act of 1940, as amended, or Subchapter M of the Internal Revenue Code of
1986. Consequently, the performance results for the Sub-adviser's composite
could have been adversely affected if the accounts included in the composite had
been regulated as investment companies. The performance information shown below
does not represent the performance of the Fund and should not be considered as
an indication of future performance of the Fund or of the Sub-adviser.
The Brandes International Fund had the same investment objective as the
Fund and was managed by the same team that will manage the Fund's securities,
using the same investment strategies, policies and techniques as those
contemplated for use by the Fund.
The results presented below may not necessarily equate with the return
experienced by any particular account of the Sub-adviser or shareholder of the
Brandes International Fund as a result of timing of investments and redemptions.
In addition, the effect of taxes on any client or shareholder will depend on
such person's tax status, and the results have not been reduced to reflect any
income tax which may have been payable.
<TABLE>
<CAPTION>
BRANDES INTERNATIONAL
YEAR EQUITY COMPOSITE (A,C) MSCI EAFE INDEX (B,C)
<S> <C> <C>
One Year, ended December 31, 1996.......................................... 16.01% 6.05%
Three Years, ended December 31, 1996....................................... 8.58 8.32
Five Years, ended December 31, 1996........................................ 13.90 8.15
Since Inception (July 1, 1990)............................................. 16.16 5.90
<CAPTION>
BRANDES INTERNATIONAL
YEAR FUND CLASS A (C,D) MSCI EAFE INDEX (B,C)
<S> <C> <C>
One Year, ended December 31, 1996.......................................... 15.23% 6.05%
Since Inception (March 6, 1995)............................................ 15.06 10.15%
</TABLE>
(a) The net annual returns presented above for the Brandes composite were
calculated on a time-weighted and asset-weighted, total return basis,
including reinvestment of all dividends, interest and income on a cash
basis, realized and unrealized gains or losses and are net of applicable
investment advisory fees, brokerage commissions and execution costs and any
applicable foreign withholding taxes, without provision for federal and
state income taxes or custodial fees, if any. The Brandes composite results
include all actual, fee-paying, fully discretionary international equity
accounts under management for at least one month beginning July 1, 1990,
other than wrap fee accounts. The weighted-average management fee during the
period from July 1, 1990 through December 31, 1996 was 0.96% per year.
Securities transactions are accounted for on the trade date and cash
accounting is utilized. Cash and equivalents are included in performance
results. Starting
B-8
<PAGE>
with calendar year 1992 through calendar year 1995, the net annual total
returns for the Brandes composite have been examined by a Big Six accounting
firm in accordance with AIMR Level II verification standards. The
examination of net annual total returns for calendar year 1996 has not yet
been completed. Copies of their reports and a complete list and description
of Brandes' composites are available on request. The results for individual
accounts and for different periods may vary. Investors should not rely on
prior performance results as a reliable indication of future results.
(b) The MSCI EAFE Index is an unmanaged index consisting of securities listed on
exchanges in European, Australian and Far Eastern markets and includes
dividends and distributions, but does not reflect fees, brokerage
commissions or other expenses of investing.
(c) All information set forth in the tables was supplied by Brandes or from
statistical services, reports or other sources believed by Brandes to be
reliable. However, such information has not been verified or audited, except
as set forth in note (a).
(d) Brandes has advised the Fund that the net annual returns for Brandes
International Fund are calculated as set forth above under "Performance
Information." Such information has not been verified or audited. Results for
Class A Shares do not include a sales charge.
OTHER SERVICE PROVIDERS. The custodian and fund accounting agent for the
Fund is State Street Bank and Trust Company, located at 225 Franklin Street,
Boston, Massachusetts 02110. The transfer agent and blue sky administrator for
the Fund is First Data Investor Services Group, Inc. ("First Data" or the
"Transfer Agent"), located at One Exchange Place, Boston, Massachusetts, 02109.
HOW TO PURCHASE SHARES
The Fund continuously offers three classes of shares. Each class is
described below under "Alternative Purchase Arrangements." Shares of the Fund
may be purchased from the Fund or from investment dealers having a sales
agreement with the Underwriter. Orders received in good form prior to 4:00 p.m.
EST or placed with a financial service firm before such time and transmitted
before the Fund processes that day's share transactions, will be processed at
that day's closing NAV, plus any applicable sales charge. The minimum initial
purchase is $2,500, however the Fund reserves the right in its discretion to
accept purchases of a lesser value. The minimum initial purchase does not apply
to IRA accounts, for which the minimum is $250; additional investments for as
little as $100 ($25 for IRA accounts) may be made at any time through an
investment dealer or by sending a check payable to Northstar Funds, c/o First
Data Investor Services Group, Inc., P.O. Box 5131, Westborough, Massachusetts
01581-5131, for the purchase of full and fractional shares. Most shareholders
choose not to hold their shares in certificate form because account transactions
such as exchanges and redemptions cannot be completed until the certificate has
been returned to the Fund and certificate holders may not participate in certain
shareholder services, such as telephone exchanges and redemptions, check-writing
and the withdrawal program. Certificates will be issued only upon written
request. Shareholders requesting certificates may incur a fee for lost or stolen
certificates and no certificates are issued for fractional shares (which shares
remain in the shareholder's account in book entry form). The Fund or the
Underwriter may refuse any purchase order for shares.
At various times, the Underwriter implements programs under which (a) a
dealer's sales force may be eligible to win cash or material awards for certain
sales efforts or under which (b) the Underwriter will reallow an amount not
exceeding the total applicable sales charges on the sales generated by the
dealer during such programs to any dealer that (i) sponsors sales contests or
recognition programs conforming to criteria established by the Underwriter or
(ii) participates in sales programs sponsored by the Underwriter. In addition,
the Adviser, Administrator and/or Underwriter may reimburse dealers for
administrative services. Sales personnel of broker-dealers distributing shares
of the Fund may receive differing compensation for selling different classes of
shares.
ALTERNATIVE SALES ARRANGEMENTS
The alternative purchase arrangements permit an investor to choose among
three methods (each a class) of purchasing shares. Each class is described
below. Which class is more beneficial to an investor depends on the amount and
intended length of the investment. Large investments qualifying for a reduced
Class A sales charge avoid the higher distribution fee. Investments in Class B
and Class C shares have 100% of the purchase invested immediately. The maximum
purchase of Class B shares is $500,000; the maximum purchase of Class C shares
is $750,000. Please consult your financial service firm.
B-9
<PAGE>
All contingent deferred sales charges are deducted from the redemption
proceeds, not the amount remaining in the account. No contingent deferred sales
charge is imposed on shares acquired through reinvestment of dividends and
distributions, or on amounts representing appreciation. In determining whether a
contingent deferred sales charge is applicable to a redemption, the calculation
will be determined in the manner that results in the lowest possible rate being
charged. Accordingly, in determining whether a contingent deferred sales charge
will be payable and, if so, the percentage charge applicable, shares acquired
through reinvestment and then shares held the longest will be considered the
first to be redeemed.
Class B shares automatically convert to Class A shares after eight years
from purchase. The purpose of the conversion is to relieve the holders from the
burden of higher distribution fees once the Underwriter had been reimbursed for
most of its distribution related expenses. For purposes of conversion to Class A
shares, shares purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's Fund account will be
considered to be held in a separate subaccount. Each time any Class B 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 shares in the subaccount will
also convert to Class A.
As set forth below, the initial or contingent deferred sales charges may be
reduced or eliminated for certain persons or organizations purchasing Fund
shares alone or in combination with other Northstar Funds. See the Statement of
Additional Information for more details regarding waivers and purchases at net
asset value.
Investors choosing the initial sales charge alternative may under certain
circumstances be entitled to pay reduced sales charges. The sales charge varies
with the size of the purchase and reduced charges apply to the aggregate of
purchases of the Fund made at one time by any "Purchaser," which term includes
(i) an individual and his/her spouse and their children under the age of 21,
(ii) a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including pension, profit-sharing or other employee benefit
trusts created pursuant to a plan qualified under Section 401 of the Internal
Revenue 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 below.
RIGHTS OF ACCUMULATION. A Purchaser may qualify for reduced initial sales
charges based upon the Purchaser's existing investment in shares of the Fund at
the time of purchase. The applicable sales charge is determined by aggregating
the dollar amount of the new purchase and the greater of the Purchaser's total
(i) net asset value or (ii) cost of all shares owned in the Fund sold subject to
a front-end sales charge and/or designated as "Class A" shares then held by such
Purchaser, and applying the sales charge applicable to such aggregate.
In order to obtain this discount, the Underwriter (if a purchase is made
through an investment dealer) or Transfer Agent (if made by mail) must be
provided with sufficient information, including the Purchaser's total cost at
the time of purchase, to permit verification that the Purchaser qualifies for a
cumulative quantity discount, and confirmation of the order is subject to such
verification. The privilege of cumulative quantity discounts may be modified or
discontinued at any time.
LETTER OF INTENT. Purchasers may also qualify for reduced sales charges by
signing a Letter of Intent ("LOI"). This enables the Purchaser to aggregate
purchases over a 13-month period of all Funds sold subject to a front-end sales
charge and/or designated as "Class A" shares. The sales charge is based on the
total amount invested during the 13-month period. A 90-day back-dated period can
be used to include earlier purchases (with a partial retroactive downward
adjustment in an amount equal to the commission paid to the broker-dealer); the
13-month period would then begin on the date of the first purchase during the
90-day period. No retroactive adjustment will be made if purchases exceed the
amount indicted in the LOI. A shareholder must notify the Transfer Agent
whenever a purchase is being made pursuant to a LOI.
The LOI is not a binding obligation on the investor to purchase the full
amount indicated; however, on the initial purchase, if required (or on
subsequent purchases if necessary), 5% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in shares registered in
the shareholder's name in order to assure payment of the proper sales charge. If
total purchases pursuant to the LOI (less any dispositions and exclusive of any
distributions on such shares automatically reinvested) are less than the amount
specified, the investor will be requested to remit to the Underwriter an amount
equal to the difference between the sales charge paid and the sales charge
applicable to the aggregate purchases actually made. If not remitted within 20
days after written request, an appropriate number of escrowed shares will be
redeemed in order to realize the difference.
CDSC WAIVERS. The contingent deferred sales charge is waived on redemptions
of Class B and Class C shares (a) following the death or disability, as defined
in Section 72(m)(7) of the Internal Revenue Code, of a shareholder (or all
B-10
<PAGE>
shareholders in the case of joint accounts) if redemption is made within one
year of the death or disability of the shareholder, as relevant; (b) in
connection with redemptions of shares made pursuant to a shareholder's
participation in any systematic withdrawal plan adopted by the Funds provided,
however, that such withdrawals shall not exceed in any calendar year 7% of the
original principal amount invested (any excess being assessed the applicable
deferred sales charge, if any), and provided further that the redeeming
shareholder reinvests all dividends and capital gain distributions during
his/her participation in the withdrawal plan; (c) after attaining the age of 70
1/2 in the case of redemption from an IRA or other retirement plan such as a
Keogh plan or custodial account pursuant to Section 403(b)(7) of the Internal
Revenue Code, or on any redemption resulting from the tax-free return of an
excess contribution pursuant to Section 408(d)(4) or (5) of the Code; and (d) in
connection with the exercise of certain exchange privileges among Class B or
Class C shares of the Funds, including shares of the Class B or Class C Account
of the Money Market Portfolio.
CLASS A SHARES. Class A shares are offered at net asset value plus an
initial or a contingent deferred sales charge as set forth below. Class A shares
bear a 0.25% annual service fee and a .05% annual distribution fee.
<TABLE>
<CAPTION>
AMOUNT RETAINED BY
% OF AMOUNT % OF OFFERING BE DEALERS AS % OF
AMOUNT PURCHASED INVESTED PRICE OFFERING PRICE
<S> <C> <C> <C>
Up to $99,999.............................................................. 4.99% 4.75% 4.00%
$100,000 to $249,999....................................................... 3.9 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 above....................................................... 0.00 0.00 0.00
</TABLE>
* The Underwriter pays investment dealers or financial service firms a
commission from its own resources of up to 1.00% of the amount invested for
amounts from $1,000,000 to $2,499,999, up to 0.50% on amounts of $2,500,000 to
$4,999,999 and up to 0.25% on amounts of $5 million and above. Purchases of
over $1 million are subject to a maximum contingent deferred sales charge of
1% (scaled down to 0.50% for amounts of $2.5 million or more, and 0.25% on
amounts over $5 million) on redemptions made within eighteen months.
CLASS B SHARES. Class B shares are offered at net asset value, without an
initial sales charge, subject to a 0.75% annual distribution fee for
approximately 8 years (at which time they convert to Class A shares bearing only
a 0.05% annual distribution fee), a 0.25% annual service fee and a contingent
deferred sales charge if shares are redeemed within five years after purchase.
As set forth below, the amount of the deferred sales charge varies depending on
the number of years after purchase that the redemption occurs. For determining
the date of purchase, all payments during a month will be aggregated and deemed
to have been made on the last day of the month. The deferred sales charge will
be assessed on an amount equal to the lesser of the current market value or the
cost of the shares being redeemed. The Underwriter currently pays investment
dealers a sales commission of 4% of the sale price of Class B shares sold by the
dealers, subject to future amendment or termination. The Underwriter will retain
all or a portion of the continuing distribution fee assessed to Class B
shareholders and will receive the entire amount of the contingent deferred sales
charge paid by shareholders on the redemption of shares to reimburse the
Underwriter in whole or in part for the payment of such sales commission, plus
financing costs and related marketing expenses.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEARS SINCE PURCHASE SUBJECT TO CHARGE
<S> <C>
First..................................................................................................... 5%
Second.................................................................................................... 4%
Third..................................................................................................... 3%
Fourth.................................................................................................... 2%
Fifth..................................................................................................... 2%
Thereafter................................................................................................ 0%
</TABLE>
To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares upon dividend reinvestment. If, at such time the investor
makes his first redemption of 50 shares (proceeds of $600), 10 shares will not
be subject to charge because of dividend reinvestment. With respect to the
remaining 40 shares, the charge is
B-11
<PAGE>
applied only to the original cost of $10 per share and not to the increase in
net asset value of $2 per share. Therefore, $400 of the $600 redemption proceeds
will be charged at a rate of 4% (the applicable rate in the second year after
purchase).
CLASS C SHARES. Investors choosing Class C shares purchase shares at net
asset value without a sales charge at the time of purchase, subject to a 0.75%
annual distribution fee, a 0.25% annual service fee, and a 1.00% contingent
deferred sales charge on redemptions made within one year from the first day of
the month after purchase.
The Underwriter currently pays investment dealers a sales commission of
1.00% of the sale price of Class C shares sold by such dealers, subject to
future amendment or termination. The Underwriter will retain the distribution
fee assessed against Class C shareholders in the first year of investment, and
the entire amount of the contingent deferred sales charge paid by Class C
shareholders upon redemption in year one, in order to compensate the Underwriter
for providing distribution related services to the Fund in connection with the
sale of Class C shares, and to reimburse the Underwriter in whole or in part for
the commissions (and any related financing costs) paid to dealers at the time of
purchase. There is no conversion feature associated with Class C shares;
therefore, Class C shareholders will be subject to the higher distribution fee
associated with such shares for the life of the shareholder's investment.
INVESTOR SERVICES AND ACCOUNT POLICIES
An account will be opened for each investor after an initial investment is
made. Shares purchased will be held in the shareholder's account by the Transfer
Agent. The Fund will send you a confirmation statement after every transaction
that affects your account balance or your account registration. The Fund sends
annual and semi-annual financial statements to all of its shareholders. To
reduce expenses, only one copy of most Fund reports will be mailed to accounts
listed under the same social security number or to households for multiple
accounts with the same surname. Information regarding the tax status of income
dividends and capital gains distribution will be mailed to shareholders on or
before January 31st of each year. Account tax information will also be sent to
the IRS. Requests for account assistance or additional information should be
directed to Northstar at (800)595-7827.
DIVIDEND AND DISTRIBUTION REINVESTMENT OPTIONS. Shareholders of Class A,
Class B and Class C shares may direct that income dividends and capital gain
distributions be paid to them through any one of the following options: income
dividends and capital gain distributions both paid in additional shares of the
same class of the Fund at net asset value; income dividends paid in cash and
capital gain distributions paid in additional shares of the same class of the
Fund at net asset value; or income dividends and capital gain distributions both
paid in cash. If a shareholder does not indicate which option is preferred upon
the opening of an account, both income dividends and capital gain distributions
will be paid in additional shares of the Fund from which the investor earned
such distributions. Payment options may be changed at any time by notifying
Northstar in writing.
AUTOMATIC INVESTMENT PLAN. Shareholders may elect to purchase shares
through the establishment of an Automatic Investment Plan, in which case the
minimum investment in order to open an account is $25. An Automatic Investment
Authorization Form (available on request from Northstar) provides for funds to
be automatically drawn on a shareholder's bank account and deposited in his or
her Fund account ($25 per month minimum). The shareholder's bank may charge a
nominal fee in connection with the establishment and use of automatic deposit
services. Shareholders may not participate in the Automatic Investment Plan
while participating in the Systematic Withdrawal Program described below.
WITHDRAWAL PROGRAM. A shareholder owning $5,000 or more worth of shares of
the Fund in book-entry form may establish a withdrawal program with the Fund and
provide for the payment monthly or quarterly of any requested dollar amount ($25
minimum per payment) from the account to his or her order. A sufficient number
of full and fractional shares will be redeemed to make the designated payment.
The purchase of shares while participating in a withdrawal program will
ordinarily be disadvantageous to the investor, since a sales charge will be paid
by the investor on the purchase of shares at the same time the shares are being
redeemed in the case of Class A shares. For this reason, shareholders may not
maintain an Automatic Investment Plan while participating in the withdrawal
program. In the case of shares subject to a contingent deferred sales charge,
unless the investor qualifies for a waiver, the investor may incur a sales
charge at the time of each withdrawal. The Fund may terminate an investor's
withdrawal program if the account value falls below $5,000 due to the transfer
or redemption of shares from the account. See the enclosed application form.
TAX-SHELTERED RETIREMENT PLANS. Shares of the Fund may be offered in
connection with the following qualified prototype retirement plans: IRA and
Rollover IRA, SEP-IRA, Profit-Sharing and Money Purchase Pension Plans which can
be adopted by self-employed persons ("Keogh") and by corporations. Call or write
Northstar for further information.
B-12
<PAGE>
EXCHANGE PRIVILEGES. Shareholders may exchange shares of the Fund for the
same class of shares of Northstar Special Fund, Northstar Growth + Value Fund,
Northstar Growth Fund, Northstar Income & Growth Fund, Northstar Balance Sheet
Opportunities Fund, Northstar Government Securities Fund, Northstar Strategic
Income Fund, Northstar High Yield Fund, and Northstar High Total Return Fund II;
or for shares of The Cash Management Fund of Salomon Brothers Investment Series
(an open-end management investment company comprised of various portfolios,
hereafter referred to as "Money Market Portfolio," that is not one of the Funds,
but is available by purchase or exchange through the Underwriter). Exchange
requests in proper form will be honored prior to 4:00 p.m. EST. For telephone
exchanges or authorization forms, contact Northstar at 1-800-595-7827. Exchanges
will be based upon each Fund's NAV per share next computed following receipt of
a properly executed exchange request, without a sales charge; provided, however,
in the case of exchanges after a direct purchase into the Money Market Portfolio
from Class A shares of the Fund, a sales charge will be imposed in accordance
with the sales charge table that is applicable to direct purchases. Collection
of the contingent deferred sales charge will 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, if
applicable, and to determine the deferred sales charge due upon redemption, if
any. The exchange of shares from the Fund to another fund is treated as a sale
of the exchanged shares and a purchase of the acquired shares for Federal income
tax purposes. Shareholders may, therefore, realize a taxable gain or loss. See
"Exchanges" and "Dividends, Distributions and Taxes" in the Statement of
Additional Information.
The Fund reserves the right to terminate or modify its exchange privileges
at any time upon prominent notice to shareholders. Such notice will be given at
least 60 days in advance. The Fund and the Money Market Portfolio have different
investment objectives and policies. Shareholders should obtain and review the
prospectus of the Fund into which the exchange is to be made before any exchange
requests are made.
TELEPHONE TRANSACTIONS. Shareholders holding shares in book-entry form may
authorize the Fund to accept telephone redemptions and exchanges. Shareholders
may redeem up to $50,000 worth of their shares by telephoning Northstar prior to
4:00 p.m. EST. Redemption proceeds must be payable to the record holder of the
shares and mailed to the shareholder's address of record or wire transferred to
the shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System, normally within one business day, but in no event longer
than three days after the request. The minimum amount for a wire transfer is
$1,000. If at any time the Fund determines that it is necessary to terminate or
modify telephone transaction privileges, shareholders would be promptly
notified. Information on these services is included in the Application and is
available from Northstar. Neither Northstar, the Underwriter nor the Fund will
be liable for any loss, damages, expense or cost arising out of any telephone
transaction effected in accordance with the Fund's procedures, upon instructions
believed to be genuine. Shareholders who utilize telephone privileges bear the
risk of any loss, damages, expense or cost arising from their election,
including risk of unauthorized use; provided, however that the Fund shall employ
reasonable procedures to confirm that all telephone instructions are genuine.
For this purpose, the Fund or its agent will require all individuals delivering
telephone instructions to provide specific information to identify themselves as
the account holder, such as the name in which the account is registered, the
account holder's social security number, account number, and broker of record.
In the absence of such procedures, or should the Fund or its agents for any
reason fail to follow such procedures, the Fund or its agents may be liable for
losses due to unauthorized or fraudulent telephone instructions.
INVOLUNTARY REDEMPTIONS. Due to the high cost of maintaining accounts with
small account values, the Fund reserves the right to close all accounts that
have been in existence for at least one year and have a value that is less than
$500. Involuntary redemptions will not be effected because of market movements;
they will only be effected in the event of redemptions resulting in an account
value of less than $500. Shareholders will receive 60 days' written notice
during which time they may bring the value up to $500 or more. If the account
value is not raised during that time, the Fund will redeem all shares in the
account and send the proceeds to the shareholder's address of record.
The Fund reserves the right to close all accounts of a shareholder who has
failed to provide a social security number or other taxpayer identification
number and certification (if required) that such number is correct, or if a
shareholder is deemed to engage in activities which are illegal or otherwise
detrimental to the Fund.
REINSTATEMENT PRIVILEGE. Shareholders have a one time privilege of
reinstating their investment into the Fund, subject to the terms of exchange
(see "Exchange Privileges") at the NAV next determined after the request for
reinstatement is made. For Federal income tax purposes, a redemption and
reinstatement will be treated as a sale and purchase of shares; special rules
may apply in computing the amount of gain or loss in these situations. See
"Dividends, Distributions and Taxes" in the Statement of Additional Information.
A written request for reinstatement must be received by the Underwriter within
30 days
B-13
<PAGE>
of the redemption accompanied by payment for the shares (not in excess of the
redemption). Shareholder accounts will be credited with an amount equal to the
deferred sales charge (or pro rata portion thereof) paid upon redemption.
HOW TO SELL SHARES
Shareholders may sell their shares back to the Fund at the NAV next
determined after the Fund receives a redemption request with any other required
documentation in proper form. Investors will be subject to the applicable
deferred sales charge, if any, for such shares. The Transfer Agent requires a
written request, with the signature guaranteed by a bank, a national stock
exchange member or other eligible guarantor institution. The Transfer Agent may
waive the signature guarantee requirement in the case of book-entry share
redemption requests of less than $50,000 if the proceeds are payable to the
account as registered and mailed to the address of record. Redemption requests
must be signed by each person in whose name the account is registered.
Shareholders may also sell shares back to the Fund through dealers who are
members of the selling group. The redemption price in such a case will be the
price as of the close of the New York Stock Exchange on that day, provided the
order is received by the dealer prior to the close of the Exchange and is
transmitted to the Underwriter prior to the close of its business. The dealer is
responsible for the timely transmission of orders to the Underwriter. No service
charge is made by the Fund on redemptions, but shares tendered through
investment dealers may be subject to a service charge by such dealers. Payment
for shares redeemed is normally made within three days. However, for shares
recently purchased by check, the Fund cannot send proceeds until the check has
cleared, which may take up to 15 days.
Redemptions by corporations, partnerships or other organizations,
executors, administrators, trustees, custodians, guardians, or from IRA's or
other retirement plans may require additional documentation. To avoid delay in
redemption or transfer, shareholders having questions about specific
requirements, including eligible guarantor institutions, should contact
Northstar at (800) 595-7827. Redemption requests will not be honored until all
required documents in the proper form have been received.
DISTRIBUTION PLANS
The Fund has adopted a distribution plan under Rule 12b-1 of the 1940 Act
for each class of shares of the Fund (collectively, the "Plans"). The Plans
permit the Fund to compensate the Underwriter in connection with activities
intended to promote the sale of shares of each class of shares of the Fund.
Pursuant to the Plans, the Fund shall pay the Underwriter 0.30% annually of the
average daily net assets of the Fund's Class A shares and 1.00% annually of the
average daily net assets of the Fund's Class B and Class C shares. Under the
NASD rules, fees of this type are limited to 0.75% annually for distribution
fees and 0.25% annually for service fees, subject to aggregate limits. The
Underwriter uses the fee to defray the costs of commissions and service fees
paid to financial service firms which have sold Fund shares, and to defray other
expenses such as sales literature, prospectus printing and distribution,
shareholder servicing costs and compensation to wholesalers. Should the fees
exceed the Underwriter's expenses in any year, the Underwriter would realize a
profit.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following discussion is intended for general information only. Each
investor should consult with his or her own tax advisor as to the tax
consequences of an investment in the Fund.
The Fund intends to continue to qualify annually and elect to be treated as
a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify, the Fund must meet certain income,
distribution and diversification requirements. In any year in which a Fund
qualifies as a regulated investment company and timely distributes all of its
taxable income, the Fund generally will not pay any U.S. federal income or
excise tax. The Fund intends to distribute to shareholders substantially all of
its net investment income and any net capital gains at least annually. It is
intended that dividends from net investment income will be paid annually on the
Fund's shares.
Dividends paid out of the Fund's investment company taxable income
(including dividends, interest and net short-term capital gains) will be taxable
to a shareholder as ordinary income. If a portion of the Fund's income consists
of dividends paid by U.S. corporations, a portion of the dividends paid by the
Fund may be eligible for the corporate dividends-received deduction.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses), if any, designated as capital gain
dividends are taxable as long-term capital gains, regardless of how long the
shareholder has held the Fund's shares. Dividends are taxable to shareholders in
the same manner whether received in cash or reinvested in additional Fund
shares.
B-14
<PAGE>
Each year the Fund will notify shareholders of the tax status of dividends
and distributions. The Fund may be required to withhold U.S. federal income tax
at the rate of 31% of all taxable distributions payable to shareholders who fail
to provide the Fund with their correct taxpayer identification number or to make
required certifications, or who have been notified by the IRS that they are
subject to backup withholding.
Investors who purchase shares of the Fund just before the distribution will
pay full price for the shares and receive a portion of the purchase price back
as a taxable distribution. Unless your account is set up as a tax-deferred
account, dividends paid to you would be included in your gross income for tax
purposes even though you may not have participated in the increase in the net
asset value of the Fund. Further information relating to tax consequences is
contained in the Statement of Additional Information. Fund distributions also
may be subject to state, local and foreign taxes. Fund distributions that are
derived from interest on obligations of the U.S. Government and certain of its
agencies, authorities and instrumentalities may be exempt from state and local
taxes in certain states.
A distribution will be treated as paid on December 31 of the current
calendar year if it is declared by the Fund in October, November or December
with a record date in such a month and paid by the Fund during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received.
Investments in zero coupon securities will result in income to the Fund
each year equal to a portion of the excess of the face value of the securities
over their issue price, even though the Fund receives no cash interest payments
from the securities.
Upon the sale or other disposition of shares of the Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares.
GENERAL INFORMATION
ORGANIZATION OF THE FUND. The Northstar International Value Fund is a
series of the Northstar Trust (the "Trust") (formerly the "Northstar Advantage
Trust"), a Massachusetts business trust. The Trust was organized in 1993.
The Trust's Declaration of Trust, as amended, provides that the Trustees
are authorized to create an unlimited number of series and, with respect to each
series, to issue an unlimited number of full and fractional shares of one or
more classes and to divide or combine the shares into a greater or lesser number
of shares without thereby changing the proportionate beneficial interests in the
series. All shares have equal voting rights, except that only shares of the
respective series or separate classes within a series are entitled to vote on
matters concerning only that series or class. As of the date of this Prospectus,
each Fund within the Trust has three classes of shares.
Neither the Trust nor the Fund are required to hold shareholder meetings,
but special meetings may be called under certain circumstances. 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.
REGISTRATION STATEMENT. This prospectus does not contain all the
information included in the Registration Statement filed for the Fund with the
Securities and Exchange Commission under the Securities Act of 1933 and the 1940
Act, with respect to the securities offered hereby, certain portions of which
have been omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. The Registration Statement, including the exhibits filed
therewith, may be examined at the office of the Securities and Exchange
Commission in Washington, D.C.
B-15
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
STATE IN WHICH, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AT
ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Expense Information................................. B-2
Investment Objective and Policies of the Fund....... B-2
Investment Considerations and Risk Factors.......... B-3
Other Investment Techniques......................... B-4
Performance Information............................. B-6
How Net Asset Value is Determined................... B-6
Management of the Fund.............................. B-7
How to Purchase Shares.............................. B-9
Alternative Sales Arrangements...................... B-9
Investor Services and Account Policies.............. B-12
How to Sell Shares.................................. B-14
Distribution Plans.................................. B-14
Dividends, Distributions and Taxes.................. B-14
General Information................................. B-15
</TABLE>
PRINCIPAL UNDERWRITER
Northstar Distributors, Inc.
Two Pickwick Plaza
Greenwich, CT 06830
1-800-595-7827
INVESTMENT ADVISER
Northstar Investment Management Corporation
Two Pickwick Plaza
Greenwich, Connecticut 06830
1-800-595-7827
TRANSFER AGENT
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 01581-5120
1-800-595-7827
