TRUST
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1998
<PAGE>
MARK L. LIPSON
NORTHSTAR TRUST
SEMI-ANNUAL REPORT
April 30, 1998
- --------------------------------------------------------------------------------
Dear Shareholders:
We are pleased to provide you with the semi-annual report of the Northstar Trust
for the six months ended April 30, 1998. We are gratified with your decision to
entrust your assets to the Northstar Funds and are confident that we can assist
you reaching your financial objectives. Our goal is to provide you with
consistent, long term, attractive returns achieved through fundamental research,
analysis, and traditional investment disciplines. Following this letter is a
summary of the results of each Fund by their respective portfolio manager. We
hope you will find it informative.
During the past six months investment returns in the U.S. have continued to be
very positive. The situation in Asia reached crisis proportions in late October
but on balance the initial six month impact actually turned out to be favorable
for U.S. financial markets by further reducing inflation and stimulating
domestic consumption as interest rates were kept low.
It has been the best of times in the U.S., a period of improvement in Western
Europe, and very difficult times in Asia, OPEC, and many emerging countries.
After 5-10 years of corporate restructuring, investment for productivity,
restraint in government spending, and continued expansion, the United States is
uniquely positioned in the world. Employment is high and with strong tax
receipts and moderate spending, federal and local budget surplusses are
surprisingly large. U.S. corporations are currently operating at the highest
profit margins since the 1960's and with very high levels of free cash flow to
reinvest, make acquisitions, or buy back stock.
The global situation has caused money to flow to U.S. financial markets and the
U.S. dollar to appreciate significantly. The stock market has been driven to
historically high valuation levels by strong investor demand plus high
profitability coupled with very low inflation. Recently the emerging markets
crisis has escalated and the impact of a rising U.S. trade deficit on U.S.
manufacturers is more noticeable. A slowdown in domestic growth from the first
quarter 4.8% rate would be welcome. However, with valuations dependent on high
profitability and continued growth, the concern for stock prices is that profits
may come under increasing pressure. Profit growth has already slowed but overall
is likely to remain positive and may accelerate in 1999. The market could remain
volatile until the outlook crystallizes. For the next few years, the new
opportunities for growth available to financially strong, well managed
corporations in new markets opening up in Europe, Asia, and South America are
very exciting. This along with a very strong and fundamentally improved domestic
economy continue to support a favorable investment environment.
We note with great conviction that attempts to "time" the market often prove
counterproductive. Investors are strongly urged to focus on the long term.
Consistent disciplined investing is the proven method of achieving attractive
returns and meeting your financial objectives. We continue to support this
philosophy and look forward to serving your investment needs in the future.
Sincerely,
Mark L. Lipson
President
June 1, 1998
1
<PAGE>
(This Page Left Blank Intentionally)
2
<PAGE>
<TABLE>
<S> <C>
LOUIS NAVEILLER
</TABLE>
NORTHSTAR
GROWTH + VALUE FUND
THE FUND
o The Northstar Growth+Value Fund opened to the public approximately
18 months ago, which makes it a relatively new product. The Fund is
fairly unique in that it attempts to "shift gears" as the stock
market environment changes. Over the past six months we have
remained focused on small and mid cap stocks in anticipation of a
rally in this sector of the market. The Fund was up 4.44%, 4.05%,
and 4.05% for Class A, B, and C, respectively, over this short
period compared to the Russell 2000 which was up 11.2% and the
Russell 2000 Growth Index which was up 9.7%. In the previous
six-month period (from April 30, 1997 to October 31, 1997) the Fund
was up 29.26%, 28.78%, and 28.78% for Class A, B, and C,
respectively, compared to the Russell 2000 which was up 26.4% and
the Russell 2000 Growth Index which was up 30.4%. Over the trailing
twelve months (from April 30, 1997 to April 30, 1998) the Fund was
up 35.00%, 34.00%, and 34.00% for Class A, B, and C, respectively,
compared to the Russell 2000 which was up 40.6% and the Russell
2000 Growth Index which was up 43.1%.
THE MARKETS
o Over the six-month period from November 1, 1997 to April 30, 1998
small-to-mid capitalization stocks lagged their large
capitalization counterparts considerably. This was largely due to
the lack of performance among many of the technology stocks. The
technology stocks tended to drag the rest of the Nasdaq market down
along with them. Technology stocks have languished ever since the
Asian crisis wreaked havoc in the fourth quarter. In addition, many
of the stock market leaders in this industry group generated
disappointing earnings in the fourth quarter and rebounded in an
unconvincing manner in the first quarter of 1998. In a similar
fashion, oil-related stocks failed to perform over the six-month
period as well. In both of these sectors, disappointing earnings
reports have kept many institutional investors away. Small cap
stocks really need volume to perform. Over the past six months our
models have shown that the best values remain in the small to mid
cap stocks. We have shied away from rotating into the large caps
because there is no significant earnings growth associated with
many of the stocks that lead the S&P 500 substantially higher a
year ago. As a result, the price-to-earnings ratio for the S&P 500
has soared! The S&P 500 is now grossly overvalued by all historical
measurements. In the interim, investors continue to chase last
year's winners by pouring money into index funds, unaware that the
S&P 500's earnings have fizzled. As it stands now, the stock market
is tired and looking for any excuse to correct.
CURRENT STRATEGY
o As institutional investors look for a place to hide in this
deteriorating earnings environment, they are finding increasingly
fewer stocks. The advance-decline line, which measures the number
of advancing stocks versus declining stocks, started to decay in
late April. There is no doubt that the breadth and power of the
stock market is deteriorating. When we select stocks for
Growth+Value Fund each week, normally we find anywhere from eight
to twelve new fundamentally superior stocks that we can add to the
Portfolio. However, I was only able to find four new stocks for the
Portfolio most recently. Often when the breadth and power of the
overall stock market deteriorates, it can work to our advantage
provided that institutional investors chase the best stocks
available and propel them higher. This is exactly what happened in
the third quarter of 1997, when the stock market became
increasingly selective, our best stocks got even stronger due to
persistent institutional accumulation. Rarely do institutional
investors build cash reserves anymore. Instead, they tend to rotate
into whatever stocks continue to post steady earnings growth. As a
result, I remain cautiously optimistic that the earnings problems
associated with many of the leading stocks in the S&P 500 will
actually work to our advantage by bolstering the institutional
buying pressure underneath stocks.
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/98)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
NAME % FUND
<C> <S> <C>
1 Dell Computer Corp. 3.6%
2 Tekelec 3.3
3 Lincare Holdings, Inc. 2.9
4 USAirways Group, Inc. 2.8
5 General Nutrition Cos., Inc. 2.6
6 Ace, Ltd. 2.5
7 Best Buy Co., Inc. 2.2
8 Enterprises Century Telephone 2.2
9 Keane, Inc. 2.2
10 Labor Ready, Inc. 2.2
------
26.5%
------
------
</TABLE>
<TABLE>
<S> <C>
TOP 5 INDUSTRIES
(BY PERCENTAGE OF NET ASSETS)
----------------
Computers 9.4%
--------------
Insurance 8.6%
Building Materials ------------
Equipment 8.0%
---------
Medical Specialties 7.6%
------
Airlines 6.6%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------
Total Net Assets $181,297,709
- ------------------------------------------
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales charge)
<S> <C> <C> <C>
- ------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- ------------------------------------------
Class A 13.96% n/a 28.57%
- ------------------------------------------
Class B 14.50% n/a 29.00%
- ------------------------------------------
Class C 17.08% n/a 33.00%
- ------------------------------------------
<CAPTION>
CUMULATIVE TOTAL RETURN
(do not reflect sales charge)
<S> <C> <C> <C>
- ------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- ------------------------------------------
Class A 26.90% n/a 35.00%
- ------------------------------------------
Class B 25.69% n/a 34.00%
- ------------------------------------------
Class C 25.69% n/a 34.00%
- ------------------------------------------
</TABLE>
3
<PAGE>
NORTHSTAR GROWTH + VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS -- 97.73%
<S> <C> <C>
AEROSPACE & DEFENSE -- 3.71%
Gulfstream Aerospace Corp. @ 83,400 $ 3,497,587
Thiokol Corp. 60,000 3,232,500
------------
6,730,087
------------
AIR FREIGHT/COURIERS -- 2.13%
Airborne Freight Corp. 97,600 3,867,400
------------
AIRLINES -- 6.61%
Alaska Air Group, Inc. @ 45,600 2,559,300
Comair Holdings, Inc. 88,000 2,403,500
Mesaba Holdings, Inc. @ 57,300 1,898,062
USAirways Group, Inc. @ 72,000 5,121,000
------------
11,981,862
------------
BANKS -- 1.82%
Fifth Third Bancorp. 60,000 3,300,000
------------
BUILDING MATERIALS -- 7.97%
Lone Star Industries, Inc. 29,200 2,412,650
Martin Marietta Materials, Inc. 58,800 2,759,925
Southdown, Inc. 47,000 3,325,250
Texas Industries, Inc. 41,000 2,641,937
Vulcan Materials Co. 28,700 3,302,294
------------
14,442,056
------------
CATALOGUE/SPECIALTY DISTRIBUTION -- 1.08%
Fingerhut Cos., Inc. 66,200 1,961,175
------------
CASINOS/GAMBLING -- 0.77%
Radica Games Ltd. @ 73,600 1,393,800
------------
CLOTHING/SHOE/ACCESSORY STORES -- 1.61%
American Eagle Outfitters, Inc. @ 50,000 2,925,000
------------
COMPUTERS -- 9.41%
Best Buy Co., Inc. @ 57,000 4,004,250
Compuware Corp. @ 61,800 3,020,475
Dell Computer Corp. @ 80,000 6,460,000
Tandy Corp. 72,000 3,582,000
------------
17,066,725
------------
CONSTRUCTION/EQUIPMENT/TRUCKS -- 3.59%
Navistar International Corp., Inc. @ 107,300 3,205,588
Terex Corp. @ 107,900 3,304,437
------------
6,510,025
------------
DIVERSIFIED COMMERICAL SERVICES -- 2.87%
Analytical Surveys, Inc. @ 39,300 1,277,250
Labor Ready, Inc. @ 124,700 3,928,050
------------
5,205,300
------------
DISCOUNT STORES -- 1.20%
Ames Department Stores, Inc. @ 89,100 2,182,950
------------
ELECTRICAL PRODUCTS -- 1.65%
Kuhlman Corp. 61,000 2,989,000
------------
</TABLE>
4
<PAGE>
NORTHSTAR GROWTH + VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EDP PERIPHERALS -- 2.84%
MTI Technology Corp. @ 200,000 $ 3,187,500
National Computer Systems, Inc. 78,600 1,965,000
------------
5,152,500
------------
EDP SERVICES -- 3.81%
Information Management Resources, Inc. @ 109,300 2,964,762
Keane, Inc. @ 78,600 3,949,650
------------
6,914,412
------------
ELECTRIC UTILITIES -- 1.40%
Western Resources, Inc. 65,000 2,539,063
------------
ENVIRONMENTAL CONTROL -- 1.97%
Catalytica, Inc. @ 177,200 2,569,400
Eastern Environmental Services, Inc. @ 38,000 992,750
------------
3,562,150
------------
HOMEBUILDERS/HOME CONSTRUCTION -- 2.29%
Fairfield Communities, Inc. @ 70,000 1,636,250
Lennar Corp. 91,900 2,521,506
------------
4,157,756
------------
HOTELS/RESORTS -- 1.46%
Royal Caribbean Cruises Ltd. 38,700 2,646,113
------------
INSURANCE -- 8.62%
Ace, Ltd. 120,000 4,545,000
Cincinnati Financial Corp. 24,200 3,082,475
Exel Ltd. 34,000 2,539,375
Fidelity National Financial, Inc. 81,040 2,988,350
Harleysville Group, Inc. 91,500 2,470,500
------------
15,625,700
------------
INVESTMENT COMPANIES -- 1.36%
Jefferies Group, Inc. 50,000 2,471,875
------------
MEDICAL SPECIALTIES -- 7.63%
Bindley Western Industries, Inc. 64,700 2,515,212
Guidant Corp. 46,000 3,076,250
Lincare Holdings, Inc. @ 65,000 5,273,125
Osteotech, Inc. @ 64,000 1,412,000
Safeskin Corp. @ 43,400 1,546,125
------------
13,822,712
------------
METAL FABRICATIONS -- 0.85%
Encore Wire Corp. @ 39,500 1,530,625
------------
NEWSPAPERS -- 1.74%
Tribune Co. 47,800 3,154,800
------------
OFFICE EQUIPMENT/SUPPLIES -- 0.34%
Herman Miller, Inc. 20,400 615,825
------------
CONSUMER SERVICES -- 1.07%
Steiner Leisure Ltd. @ 61,500 1,941,094
------------
TELEPHONE/COMMUNICATIONS -- 2.15%
Century Telephone Enterprises, Inc. 91,600 3,898,725
------------
</TABLE>
5
<PAGE>
NORTHSTAR GROWTH + VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares/Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
PRINTING & PUBLISHING -- 1.26%
<S> <C> <C>
McGraw-Hill Cos., Inc. 29,400 $ 2,276,663
------------
SAVINGS & LOAN -- 0.83%
PDS Financial Corp. @ 152,955 1,500,871
------------
SOFT DRINKS -- 1.01%
Cadbury Schweppes PLC ** 31,500 1,823,063
------------
SPECIALTY CHEMICALS -- 1.69%
Millennium Chemicals, Inc. 85,500 3,067,313
------------
SPECIALTY STORES -- 2.59%
General Nutrition Cos., Inc. @ 131,100 4,703,212
------------
TELECOMMUNICATIONS -- 3.33%
Tekelec @ 120,000 6,030,000
------------
TEXTILES -- 1.89%
WestPoint Stevens, Inc. @ 102,000 3,417,000
------------
TRUCKING & FREIGHT -- 0.73%
M.S. Carriers, Inc. @ 39,000 1,326,000
------------
RECREATIONAL PRODUCTS/TOYS -- 1.19%
THQ, Inc. @ 81,900 2,160,113
------------
PHARMACEUTICALS -- 1.26%
Theragenics Corp. @ 80,000 2,280,000
------------
TOTAL COMMON STOCKS
(cost $148,246,356) 177,172,965
------------
TOTAL INVESTMENT SECURITIES -- 97.73%
(cost $148,246,356) 177,172,965
REPURCHASE AGREEMENT -- 1.55%
Agreement with State Street Bank and Trust bearing
interest at 5.24% dated 4/30/98, to be repurchased
5/01/98 in the amount of $2,812,409 and collateralized
by $2,765,000 U.S. Treasury Bonds, 6.25% due 2/15/07,
value $2,868,688
(cost $2,812,000) $2,812,000 2,812,000
OTHER ASSETS LESS LIABILITIES -- 0.72% 1,312,744
------------
NET ASSETS -- 100.00% $181,297,709
------------
------------
</TABLE>
@ Non-income producing security.
** American Depositary Receipts.
See accompanying notes to financial statements.
6
<PAGE>
NORTHSTAR
INTERNATIONAL VALUE FUND
THE MARKETS
o The international markets experienced mixed returns over the
six-month period ending April 30, 1998. The MSCI Europe Australasia
Far East Index (EAFE) rose 15.44% for the period. Spain was the
best performing market for the period, rising over 54% in dollar
terms, while Indonesia was the worst performing market, declining
over 61% in dollar terms.
o European equities continued to benefit from an ongoing economic
expansion and aggressive corporate restructuring. The equity-market
rally in Europe was broad-based, with nearly every major market up
over 20% for the period. Latin American markets were mixed, as
concerns over potential current-account deficits kept a damper on
demand for Latin American equities, despite relatively solid
economic fundamentals throughout the region. The Asian markets have
not fully recovered from the plunge in currency values which
ignited the region's economic crisis last summer.
THE FUND
o The Fund continued its strong performance over the period,
returning 19.02%, 18.62%, and 18.53% for Class A, B, and C,
respectively. The Lipper Index of International Equity Funds
returned 16.60% for the same period.
o Consistent with world markets, European holdings were the most
significant contributors to the Fund's performance, with Italy, the
Netherlands, and France leading the way. Similarly, Asian holdings
were the largest detractors from performance. On a sector basis,
the Consumer Goods and Services sectors were the strongest
performers.
o Our largest regional commitment continues to be in Europe, followed
by an increasing exposure to Asia. Banking and Telecommunications
remain the largest industry commitments.
CURRENT STRATEGY
o The bottom-up, value philosophy used in managing the Fund will be
consistently applied to find the best opportunities available in
non-U.S. markets. There is no focus on top-down macroeconomic
evaluations or forecasts in structuring the Fund. Country and
industry exposure are exclusively a residual of the purchase of
individual businesses that meet the strict value criteria.
o The fundamental valuations of the Fund reflect, and will continue
to reflect, significant discounts to the world market averages.
This absolute value focus has performed very favorably in declining
market environments as well as doing well over long-term market
cycles.
o The Fund will endeavor to stay fully invested in non-U.S. equities
and will not attempt to anticipate short-term market movements. We
will hold the best values available without bias to either country
or industry.
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/98)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
NAME % FUND
<C> <S> <C>
1 Daimler-Benz AG 4.4%
2 Hitachi Ltd. 3.6%
3 Tele Danmark A/S 3.5%
4 Groupe Danone 3.3%
5 ING Groep N.V. 3.3%
6 BTR PLC 3.2%
7 Diageo PLC 3.1%
8 Nestle SA 3.0%
9 Istito Mobiliare Italiano SpA 2.9%
10 De Beers Centenary AG 2.8%
------
33.1%
------
------
</TABLE>
<TABLE>
<S> <C>
TOP 5 INDUSTRIES
(by percentage of net assets)
----------------
Banking 14.3%
---------------
Telecommunications 13.9%
------------
Multi-Industry 9.1%
----------
Automobile 6.9%
----------
Beverage/Tobacco 6.3%
- --------------------------------------------
Total Net Assets $399,020,797
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales charge)
<S> <C> <C> <C>
- --------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- --------------------------------------------
Class A 17.97% n/a 22.85%
- --------------------------------------------
Class B 24.02% n/a 23.83%
- --------------------------------------------
Class C 19.10% n/a 26.96%
- --------------------------------------------
<CAPTION>
CUMULATIVE TOTAL RETURN
(do not reflect sales charge)
<S> <C> <C> <C>
- --------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- --------------------------------------------
Class A 76.75% n/a 28.96%
- --------------------------------------------
Class B 28.83% n/a 28.83%
- --------------------------------------------
Class C 73.41% n/a 27.96%
- --------------------------------------------
</TABLE>
7
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Country Value % of Net Assets
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Argentina $ 9,281,632 2.33%
Austria 3,338,138 0.84%
Brazil 22,442,066 5.62%
Denmark 22,750,656 5.70%
France 40,651,788 10.19%
Germany 27,436,182 6.87%
Hong Kong 18,473,683 4.63%
Italy 21,364,369 5.35%
Japan 54,822,057 13.74%
Korea 6,005,216 1.50%
Mexico 8,806,886 2.21%
Netherlands 18,771,048 4.70%
Singapore 12,653,016 3.17%
South Africa 12,726,259 3.19%
Spain 9,923,481 2.49%
Switzerland 11,956,115 3.00%
United Kingdom 54,957,259 13.77%
United States 29,756,000 7.46%
Venezuela 2,468,950 0.62%
Other assets less liabilities 10,435,996 2.62%
------------ ---------------------
Net Assets $399,020,797 100.00%
------------ ---------------------
------------ ---------------------
</TABLE>
8
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 86.77%
AUTOMOBILES -- 6.89%
Daimler-Benz AG (Germany) 181,000 $ 17,670,837
PSA Peugeot Citroen SA (France) 56,610 9,832,114
------------
27,502,951
------------
BANKING -- 13.48%
Argentaria SA (Spain) 87,980 7,336,481
Compagnie Financiere de Paribas (France) 42,400 4,514,390
Den Danske Bank A/S (Denmark) 71,680 8,694,008
Development Bank of Singapore Ltd. (Singapore) 1,128,000 7,484,360
HSBC Holdings PLC @ (United Kingdom) 363,600 10,373,819
Istituto Mobiliare Italiano SpA (Italy) 707,200 11,578,062
Societe Generale SA (France) 18,200 3,790,784
------------
53,771,904
------------
BEVERAGES/TOBACCO -- 5.17%
B.A.T. Industries PLC (United Kingdom) 890,000 8,396,283
Diageo PLC (United Kingdom) 1,028,012 12,243,233
------------
20,639,516
------------
CHEMICALS -- 2.36%
BOC Group PLC (United Kingdom) 226,200 3,863,103
Imperial Chemical Industries PLC (United Kingdom) 304,800 5,536,849
------------
9,399,952
------------
ELECTRICAL & ELECTRONICS -- 5.36%
Hitachi Ltd. (Japan) 2,017,200 14,465,187
Matsushita Electric Industrial Co. Ltd. (Japan) 431,000 6,904,338
------------
21,369,525
------------
ENERGY -- 5.07%
Elf Aquitaine SA (France) 70,795 9,292,506
Nippon Oil Co. Ltd. (Japan) 492,000 1,661,811
YPF Sociedad Anonima ** (Argentina) 266,140 9,281,632
------------
20,235,949
------------
FOOD & HOUSEHOLD PRODUCTS -- 6.31%
Groupe Danone (France) 55,970 13,221,993
Nestle SA (Switzerland) 6,165 11,956,115
------------
25,178,108
------------
HEALTHCARE/PHARMACEUTICAL -- 0.50%
Ono Pharmaceutical Co. Ltd. (Japan) 92,000 2,002,116
------------
INDUSTRIAL COMPONENTS -- 2.07%
Kyocera Corp. (Japan) 157,200 8,243,676
------------
INSURANCE -- 5.88%
ING Groep N.V. (Netherlands) 201,260 13,041,401
Tokio Marine & Fire Insurance Co. (Japan) 959,400 10,439,293
------------
23,480,694
------------
MACHINERY & ENGINEERING -- 2.78%
Komatsu (Japan) 434,000 1,967,659
Mitsubishi Heavy Industries Ltd. (Japan) 2,468,000 9,137,978
------------
11,105,637
------------
</TABLE>
9
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
METALS -- STEEL -- 0.86%
Iscor Ltd. (South Africa) 4,491,050 $ 1,448,439
Pohang Iron & Steel Co. Ltd. ** (South Korea) 111,000 1,977,188
------------
3,425,627
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 2.83%
De Beers Centenary AG (South Africa) 435,100 11,277,819
------------
MULTI INDUSTRY -- 9.12%
BTR PLC (United Kingdom) 3,839,180 12,763,317
Citic Pacific Ltd. (Hong Kong) 1,038,000 3,189,311
Hutchison Whampoa Ltd. (Hong Kong) 1,273,500 7,875,116
Jardine Matheson Holdings Ltd. (Singapore) 1,224,800 5,168,656
Swire Pacific Ltd. (Hong Kong) 1,483,000 7,409,256
------------
36,405,656
------------
NON-FERROUS METALS -- 0.45%
Rio Tinto PLC @ (United Kingdom) 124,000 1,780,655
------------
TELECOMMUNICATIONS -- 12.68%
Compania Anonima Nacional Telefonos de Venezuela ** (Venezuela) 73,700 2,468,950
Deutsche Telekom AG (Germany) 386,000 9,765,345
Royal PTT Nederland NV (Netherlands) 111,400 5,729,647
Tele Danmark A/S (Denmark) 167,290 14,056,648
Telecom Italia SpA (Italy) 1,308,300 9,786,307
Telefonos de Mexico SA ** (Mexico) 155,530 8,806,886
------------
50,613,783
------------
UTILITIES -- ELECTRICAL & GAS -- 4.96%
Centrais Eletricas Brasileiras SA ** (Brazil) 476,100 9,819,562
EVN Energie-Versorgung Niederoesterreich AG (Austria) 22,600 3,338,138
Korea Electric Power Corp. ** (South Korea) 432,540 4,028,029
Union Electrica Fenosa SA (Spain) 200,000 2,587,000
------------
19,772,729
------------
TOTAL COMMON STOCKS
(cost $311,207,056) 346,206,297
------------
CONVERTIBLE PREFERRED STOCKS -- 3.16%
BANKING -- 0.81%
Banco Bradesco SA ** (Brazil), $0.1356 330,000 3,234,000
------------
BEVERAGES/TOBACCO -- 1.13%
Companhia Cervejaria Brahma ** (Brazil), $0.1687 343,000 4,523,313
------------
TELECOMMUNICATIONS -- 1.22%
Telecomunicacoes Brasileiras SA ** (Brazil), $1.944 39,940 4,865,191
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $12,378,259) 12,622,504
------------
TOTAL INVESTMENT SECURITIES -- 89.93%
(cost $323,585,315) 358,828,801
</TABLE>
10
<PAGE>
NORTHSTAR INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 7.45%
Agreement with State Street Bank and Trust bearing interest
at 5.24% dated 4/30/98, to be repurchased 5/01/98 in the
amount of $29,760,331 and collateralized by $25,515,000 U.S.
Treasury Bonds, 7.50% due 11/15/16, value $30,351,343
(cost $29,756,000) $ 29,756,000 $ 29,756,000
OTHER ASSETS LESS LIABILITIES -- 2.62% 10,435,996
------------
NET ASSETS -- 100.00% $399,020,797
------------
------------
</TABLE>
@ Non-income producing.
** American Depositary Receipts.
See accompanying notes to financial statements.
11
<PAGE>
NORTHSTAR
EMERGING MARKETS VALUE FUND
THE MARKETS
o Asia economic crisis that began last summer, triggered by plunging
currency values, showed signs of stabilizing and equity markets in
South Korea, Thailand and the Philippines rallied sharply. The Hong
Kong dollars peg to the U.S. dollar was successfully defended by
Hong Kong monetary authorities, and fears of the devaluation of the
Chinese renminbi did not come true. All of this, coupled with the
IMF bailouts in South Korea and Thailand, made investors cautiously
optimistic that the worst of the turmoil may already have passed.
o Equity markets in Latin America came under intense scrutiny and
skepticism in the aftermath of the Asian crisis. Investors were
particularly sensitive to current-account balances, which measure
trade in goods and services. Concerns over potential
current-account deficits have dampened demand for Latin American
equities, despite relatively solid economic fundamentals throughout
the region. Markets in Argentina and Brazil posted modest advances
in dollar terms, while Mexican and Chilean equities declined. The
improving sentiment in Asia, and the modest gains in Latin America
helped the MSCI EMI Index climb 5.03% during the period.
THE FUND
o The Fund returned 5.10%, 4.90%, and 4.70% for class A, B, and C
shares, respectively, for the period January 1, 1998 to April 30,
1998. The Lipper Index of International Equity Funds returned
16.66% for the same period.
o Holdings in South Africa, India, and Brazil were the largest
contributors to performance during the period. Stocks in Russia,
Hong Kong and South Korea detracted from the Funds performance. At
the sector level, positive performance came from materials,
banking, and energy stocks.
CURRENT STRATEGY
o The bottom-up, value philosophy used in managing the Fund will be
consistently applied to find the best opportunities available in
emerging markets. There is no focus on top-down macroeconomic
evaluations or forecasts in structuring the Fund. Country and
industry exposure are exclusively a residual of the purchase of
individual businesses that meet the strict value criteria.
o The fundamental valuations of the Fund reflect, and will continue
to reflect, discounts to the emerging market averages. This
absolute value focus has performed very favorably in declining
market environments as well as doing well over long-term market
cycles.
o The Fund will endeavor to stay fully invested in emerging market
equities and will not attempt to anticipate short-term market
movements. We will hold the best values available without bias to
either country or industry.
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/98)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
NAME % FUND
<C> <S> <C>
1 Centrias Electicas Brasileiras
SA 3.8%
2 De Beers Centenary AG 3.0%
3 Telecomunicacoes Brasileiras SA 2.7%
4 Sk Telecom Co. Ltd. 2.6%
5 YPF Sociedad Anonima 2.5%
6 Pacific and Orient Berhad 2.3%
7 Iscor Ltd. 2.2%
8 Telefonos de Mexico SA 2.2%
9 Philippine Long Distance
Telephone Co. 2.1%
10 Copene-Petroquimica do Nordeste
SA 2.0%
------
25.4%
------
------
</TABLE>
<TABLE>
<S> <C>
TOP 5 INDUSTRIES
(by percentage of net assets)
----------------
Telecommunications 11.6%
---------------
Energy 8.0%
---------------
Utilities 8.0%
----------
Banking 7.6%
----------
Multi-Industry 6.6%
- --------------------------------------------
Total Net Assets $5,913,556
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales charge)
<S> <C> <C> <C>
- --------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- --------------------------------------------
Class A 0.29% n/a n/a
- --------------------------------------------
Class B (0.30)% n/a n/a
- --------------------------------------------
Class C 11.64% n/a n/a
- --------------------------------------------
<CAPTION>
CUMULATIVE TOTAL RETURN
(do not reflect sales charge)
<S> <C> <C> <C>
- --------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- --------------------------------------------
Class A 5.10% n/a n/a
- --------------------------------------------
Class B 4.90% n/a n/a
- --------------------------------------------
Class C 4.70% n/a n/a
- --------------------------------------------
</TABLE>
12
<PAGE>
NORTHSTAR EMERGING MARKETS VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Country Value % of Net Assets
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Argentina $ 256,733 4.34%
Brazil 967,514 16.36%
Chile 48,469 0.82%
China 210,038 3.55%
Colombia 112,500 1.90%
Hong Kong 308,382 5.22%
India 441,401 7.46%
Indonesia 21,867 0.37%
Israel 51,667 0.87%
Korea 227,200 3.84%
Malaysia 235,558 3.98%
Mexico 218,711 3.70%
Philippines 531,403 8.99%
Poland 76,000 1.29%
Singapore 137,582 2.33%
South Africa 530,621 8.97%
Thailand 8,014 0.14%
United States 1,042,000 17.62%
USSR 207,448 3.51%
Venezuela 113,900 1.93%
Other assets less liabilities 166,348 2.81%
------------ ---------------------
Net Assets $ 5,913,356 100.00%
------------ ---------------------
------------ ---------------------
</TABLE>
13
<PAGE>
NORTHSTAR EMERGING MARKETS VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 65.11%
AUTOMOBILES -- 1.82%
Toyota South Africa Ltd. (South Africa) 23,700 $ 107,855
------------
BANKING -- 4.07%
Bank Handlowy w Warszawie SA ## (Poland) 4,000 76,000
Bank Leumi Le-Israel (Israel) 15,800 28,830
Kwong On Bank Ltd. (Hong Kong) 126,000 105,732
PT Bank PAN Indonesia (Indonesia) 279,900 21,867
Thai Farmers Bank Public Co. Ltd. (Thailand) 3,500 8,014
------------
240,443
------------
BEVERAGES/TOBACCO -- 1.83%
Massalin Particulares SA (Argentina) 20,600 108,166
------------
BUILDING MATERIALS & COMPONENTS -- 1.66%
Southeast Asia Cement Holdings, Inc. @ (Philippines) 6,924,600 98,307
------------
CHEMICALS -- 3.69%
Indian Petrochemicals Corp. Ltd. ## (India) 20,800 117,000
Shanghai Petrochemical Co. Ltd. ** (China) 7,400 101,287
------------
218,287
------------
ELECTRICAL & ELECTRONICS -- 1.57%
Solid Group, Inc. (Philippines) 1,859,400 92,623
------------
ENERGY -- 8.02%
Lukoil Holding ** (Russia) 1,440 95,400
Petron Corp. (Philippines) 100,400 14,754
RAO Gazprom ** (Russia) 5,960 112,048
Sasol Ltd. (South Africa) 5,900 59,537
Sasol Ltd. ** (South Africa) 4,300 43,806
YPF Sociedad Anonima ** (Argentina) 4,260 148,567
------------
474,112
------------
FINANCIAL SERVICES -- 1.84%
Grupo Financiero Inbursa SA de CV ** (Mexico) 5,800 88,473
Industrial Credit & Investment Corp. of India Ltd. ##
(India) 1,570 20,418
------------
108,891
------------
FOOD & HOUSEHOLD PRODUCTS -- 1.52%
RFM Corp. (Philippines) 632,900 89,851
------------
INSURANCE -- 2.32%
Pacific and Orient Berhad (Malaysia) 257,000 137,113
------------
LEISURE & TOURISM -- 3.23%
Resorts World Berhad (Malaysia) 51,000 98,445
Shangri-La Asia Ltd. (Hong Kong) 128,000 92,538
------------
190,983
------------
MACHINERY & ENGINEERING -- 1.84%
Larsen & Toubro Ltd. ## (India) 8,700 108,750
------------
MERCHANDISING -- 2.37%
Dairy Farm International Holdings Ltd. @ (Singapore) 61,000 78,080
Dickson Concepts International Ltd. (Hong Kong) 44,900 62,023
------------
140,103
------------
</TABLE>
14
<PAGE>
NORTHSTAR EMERGING MARKETS VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
METALS -- STEEL -- 2.76%
Iscor Ltd. (South Africa) 396,000 $ 127,717
Pohang Iron & Steel Co. Ltd. ** (South Korea) 2,000 35,625
------------
163,342
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 3.24%
De Beers Centenary AG (South Africa) 6,800 176,256
De Beers Centenary AG ** (South Africa) 600 15,450
------------
191,706
------------
MULTI INDUSTRY -- 6.58%
First Pacific Co. Ltd. (Hong Kong) 100,000 48,089
Indian Rayon and Industries Ltd. ## (India) 18,500 99,437
Jardine Matheson Holdings Ltd. (Singapore) 13,600 57,392
Jardine Matheson Holdings Ltd. ** (Singapore) 500 2,110
JG Summit Holding, Inc. (Philippines) 1,432,300 110,589
Koors Industries Ltd. ** (Israel) 900 22,838
Quinenco SA ** @ (Chile) 4,700 48,469
------------
388,924
------------
TELECOMMUNICATIONS -- 8.89%
Compania Anonima Nacional Telefonos de Venezuela **
(Venezuela) 3,400 113,900
Philippine Long Distance Telephone Co. ** (Philippines) 4,640 125,280
SK Telecom Co. Ltd. ** (South Korea) 21,000 156,187
Telefonos de Mexico SA ** (Mexico) 2,300 130,238
------------
525,605
------------
TEXTILE/APPAREL -- 1.62%
Bombay Dyeing and Manufacturing Co. Ltd. ## (India) 39,100 95,795
------------
UTILITIES -- ELECTRICAL & GAS -- 6.24%
Centrais Eletricas Brasileiras SA ** (Brazil) 10,900 224,812
Korea Electric Power Corp. ** (South Korea) 3,800 35,388
Shandong Huaneng Power Co. Ltd. ** (China) 15,000 108,750
------------
368,950
------------
TOTAL COMMON STOCKS
(cost $3,873,268) 3,849,806
------------
CONVERTIBLE PREFERRED STOCKS -- 14.46%
BANKING -- 3.51%
Banco Ganadero SA ** (Colombia), $1.0600 6,000 112,500
Uniao de Bancos Brasileiros SA ## (Brazil), $0.7976 2,400 95,400
------------
207,900
------------
BEVERAGES/TOBACCO -- 1.58%
Companhia Cervejaria Brahma ** (Brazil), $0.1687 7,100 93,631
------------
CHEMICALS -- 2.00%
Copene-Petroquimica do Nordeste SA ** (Brazil), $2.2260 8,000 118,179
------------
FOREST & PAPER PRODUCTS -- 1.33%
Aracruz Celulose SA ** (Brazil), $0.3760 5,000 78,750
------------
METALS -- STEEL -- 1.60%
Usinas Siderurgicas de Minas Gerais SA ** (Brazil),
$0.4480 13,700 94,604
------------
</TABLE>
15
<PAGE>
NORTHSTAR EMERGING MARKETS VALUE FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares/Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 2.68%
Telecomunicacoes Brasileiras SA ** (Brazil), $1.9440 1,300 $ 158,293
------------
UTILITIES -- ELECTRICAL & GAS -- 1.76%
Centrais Eletricas de Santa Catarina SA ** (Brazil),
$1.7800 560 64,615
Centrais Eletricas de Santa Catarina SA ** (Brazil),
$0.1355 340 39,230
------------
TOTAL CONVERTIBLE PREFERRED STOCKS 103,845
------------
(cost $872,131) 855,202
------------
TOTAL INVESTMENT SECURITIES -- 79.57%
(cost $4,745,399) 4,705,008
REPURCHASE AGREEMENT -- 17.62%
Agreement with State Street Bank and Trust bearing
interest at 5.24% dated 4/30/98, to be repurchased
5/01/98 in the amount of $1,042,152 and collateralized by
$850,000 U.S. Treasury Bonds, 8.125% due 8/15/19, value
$1,067,055
(cost $1,042,000) $1,042,000 1,042,000
OTHER ASSETS LESS LIABILITIES -- 2.81% 166,348
------------
NET ASSETS -- 100.00% $ 5,913,356
------------
------------
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Contract In Delivery Gross Unrealized
To Deliver Exchange For Date Appreciation
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
ARS 21,126 USD 21,137 5/04/98 $0
MYR 102,947 USD 27,091 5/06/98 468
MYR 21,870 USD 5,849 5/07/98 4
----------------
472
----------------
- ---------------------------------------------------------------------------------------------
<CAPTION>
Contract In Delivery Gross Unrealized
To Deliver Exchange For Date Depreciation
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
HKD 39,400 USD 5,089 5/01/98 $(2)
MYR 99,097 USD 26,590 5/08/98 (75)
PHP 491,758 USD 12,418 5/04/98 (185)
PHP 1,741,935 USD 43,494 5/06/98 (188)
PHP 419,803 USD 10,456 5/07/98 (23)
ZAR 62,261 USD 12,326 5/05/98 (22)
----------------
(495)
----------------
Net Depreciation $(23)
- ---------------------------------------------------------------------------------------------
</TABLE>
ARS - Argentine Peso
MYR - Malaysian Ringgit
HKD - Hong Kong Dollar
PHP - Philippine Peso
USD - United States Dollar
ZAR - South African Rand
# # Global Depositary Receipts.
@ Non-income producing security.
** American Depositary Receipts.
See accompanying notes to financial statements.
16
<PAGE>
<TABLE>
<S> <C>
GEOFFREY WADSWORTH
</TABLE>
NORTHSTAR
INCOME AND GROWTH FUND
THE MARKETS
o For the six months ended April 30,1998 the Dow Industrials were up
22.84% and the S&P 500 gained 22.47%. The stock market returns were
flat during November, December and January, then had a strong 20%
advance through late April.
o The early fears surrounding the crisis in Asia gave way as the
initial impact actually proved very favorable to U.S. financial
markets. Inflation continued to decline, real incomes grew and
liquidity in the economy accelerated. While corporate earnings
growth moderated, the demand for U.S. bonds and stocks remained
very strong.
o The yields on bonds continued in a declining trend until
mid-January when the surprising strength in the U.S. economy was
increasingly visible. The return on 10 yr. and 30 yr. Treasuries
for the six months was 5.67% and 5.95%, respectively.
THE FUND
o The Fund had returns of 8.38%, 8.01%, and 8.05% for the class A, B,
and C shares, respectively, for the six months. This was well above
the average for investment grade bonds but lagged the Lipper
average of 12.28% for balanced funds.
o During most of 1997 the equity position of the Fund was
concentrated in 22 high dividend yield, large capitalization stocks
including large positions in tobacco, money center international
banks, integrated oils, but no technology stocks and an
underweighting in financials.
o Late in 1997 and early 1998 the equity holdings were diversified to
include more total return stocks with a higher growth component.
The number of holdings was increased to 38 equities, concentrations
were cut, and 28 new stocks were added including domestic
financials, technology, real estate, oil services, and natural gas.
To maintain current income, high yielding REITS were balanced with
other new additions such as Xerox, Meredith, NationsBank, Magna
International, and Schlumberger.
o While the domestic financials and industrials such as Xerox and
Magna have done well this year, the new positions in real estate
and oil services have not been leaders yet and the reduced holdings
in tobacco were still a drag.
CURRENT STRATEGY
o The Fund remains targeted at about 60% dividend paying stocks with
an average dividend yield of 2.4% which is about 1.0% point higher
than the S&P 500. High quality domestic bonds are 40% (average
rating - A, coupon just under 7%, and average maturity about 10
years). This brings the portfolio yield to 4.4% before expenses.
The percentage of corporate bonds was increased somewhat picking up
a little income and reducing the average rating only slightly.
o While real estate and oil service stocks have lagged so far in
1998, the fundamental outlook remains very favorable and relative
valuations especially attractive. These are being retained
expecting better gains as the year progresses.
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/98)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
NAME % FUND
<C> <S> <C>
1 Bristol-Myers Squibb Co. 3.5%
2 Cendant Corp. 2.9
3 Xerox Corp. 2.7
4 Merck & Co., Inc. 2.6
5 Magna International 2.3
6 Deere & Co. 2.2
7 General Electric 2.2
8 AMP 2.0
9 Philip Morris 2.0
10 Kimberly-Clark Corp. 1.9
------
24.3%
------
------
</TABLE>
<TABLE>
<S> <C>
TOP 5 INDUSTRIES
(by percentage of net assets)
Real Estate Investment ----------------
Trust 9.3%
---------------
Finance & Banking 8.1%
------------
Financial 7.1%
----------
Pharmaceutical 7.0%
-------
Consumer Products 5.0%
- --------------------------------------------
Total Net Assets $199,005,758
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales charge)
<S> <C> <C> <C>
- --------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- --------------------------------------------
Class A 10.99% N/A 12.77%
- --------------------------------------------
Class B 10.22% N/A 12.60%
- --------------------------------------------
Class C 11.58% N/A 16.59%
- --------------------------------------------
<CAPTION>
CUMULATIVE TOTAL RETURN
(do not reflect sales charge)
<S> <C> <C> <C>
- --------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- --------------------------------------------
Class A 67.51% N/A 18.42%
- --------------------------------------------
Class B 52.80% N/A 17.60%
- --------------------------------------------
Class C 56.88% N/A 17.59%
- --------------------------------------------
</TABLE>
17
<PAGE>
NORTHSTAR INCOME & GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Industry Value % of Net Assets
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Aerospace & Defense $ 4,216,129 2.12%
Airlines 4,002,344 2.01%
Auto Parts & Equipment 4,555,769 2.29%
Automobiles 3,103,078 1.56%
Banking 3,160,500 1.59%
Bank Investment Contracts 2,807,000 1.41%
Broadcasting & Media 3,766,932 1.89%
Capital Goods Manufacturing 4,358,400 2.19%
Chemicals 3,299,863 1.66%
Computers 2,811,863 1.41%
Consumer Products 9,990,346 5.02%
Consumer Staples 3,654,288 1.84%
Electrical Equipment 3,931,250 1.98%
Energy 2,014,500 1.01%
Energy Services 3,713,796 1.87%
Financial 14,052,402 7.06%
Finance & Banking 16,193,602 8.14%
Industrial and Commercial Services 5,712,706 2.87%
Insurance 4,669,687 2.35%
Machinery 4,406,187 2.21%
Office Equipment/Supplies 5,357,200 2.69%
Oil & Gas 6,211,687 3.12%
Petroleum Services 3,132,675 1.57%
Pharmaceutical 13,926,938 7.00%
Printing & Publishing 649,300 0.33%
Real Estate Investment Trust 18,534,425 9.31%
Retail 3,226,680 1.62%
Technology 3,679,812 1.85%
Telecommunications 6,624,453 3.33%
Tobacco 1,707,966 0.86%
Transportation 2,085,750 1.05%
U.S. Government Agency 22,577,322 11.34%
Utilities 6,178,662 3.10%
Other assets less liabilities 692,246 0.35%
------------ ----------------
Net Assets $199,005,758 100.00%
------------ ----------------
------------ ----------------
</TABLE>
18
<PAGE>
NORTHSTAR INCOME & GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 55.64%
AEROSPACE & DEFENSE -- 0.97%
Boeing Co. 38,740 $ 1,939,421
------------
AUTO PARTS & EQUIPMENT -- 2.29%
Magna International, Inc. @@ 61,100 4,555,769
------------
AUTOMOBILES -- 1.56%
Chrysler Corp. 77,215 3,103,078
------------
CAPITAL GOODS MANUFACTURING -- 2.19%
General Electric Co. 51,200 4,358,400
------------
CHEMICALS -- 1.66%
E.I. du Pont De Nemours & Co. 45,320 3,299,863
------------
COMPUTERS -- 1.41%
Compaq Computer Corp. 100,200 2,811,863
------------
CONSUMER PRODUCTS -- 5.02%
Kimberly-Clark Corp. 76,455 3,880,091
Minnesota, Mining & Manufacturing Co. 22,820 2,153,638
Philip Morris Cos., Inc. 106,040 3,956,617
------------
9,990,346
------------
ELECTRICAL EQUIPMENT -- 1.98%
AMP, Inc. 100,000 3,931,250
------------
ENERGY -- 1.01%
Mobil Corp. 25,500 2,014,500
------------
FINANCE & BANKING -- 6.13%
Bankers Trust New York Corp. 26,770 3,456,676
Citicorp 21,000 3,160,500
Mellon Bank Corp. 41,600 2,995,200
NationsBank Corp. 34,200 2,590,650
------------
12,203,026
------------
INSURANCE -- 2.35%
Conseco, Inc. 70,500 3,498,562
Nationwide Financial Services, Inc. 27,000 1,171,125
------------
4,669,687
------------
MACHINERY -- 2.21%
Deere & Co. 75,400 4,406,187
------------
OFFICE EQUIPMENT/SUPPLIES -- 2.69%
Xerox Corp. 47,200 5,357,200
------------
OIL & GAS -- 3.12%
Baker Hughes, Inc. 54,000 2,187,000
El Paso Natural Gas Co. 59,400 2,194,087
ENSCO International, Inc. 64,800 1,830,600
------------
6,211,687
------------
PETROLEUM SERVICES -- 1.57%
Schlumberger Ltd. 37,800 3,132,675
------------
</TABLE>
19
<PAGE>
NORTHSTAR INCOME & GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares/Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
PHARMACEUTICAL -- 6.07%
Bristol-Myers Squibb Co. 66,000 $ 6,987,750
Merck & Co., Inc. 42,200 5,085,100
------------
12,072,850
------------
PRINTING & PUBLISHING -- 0.33%
Meredith Corp. 15,100 649,300
------------
REAL ESTATE INVESTMENT TRUST -- 9.31%
Boston Properties, Inc. 55,800 1,844,888
CarrAmerica Realty Corp. 101,600 2,971,800
Developers Diversified Realty Corp. 50,000 1,984,375
Felcor Suite Hotels, Inc. 60,700 2,124,500
Glimcher Realty Trust 77,360 1,643,900
Kilroy Realty Corp. 92,800 2,459,200
Spieker Properties, Inc. 58,900 2,333,912
Starwood Lodging Trust 63,200 3,171,850
------------
18,534,425
------------
TELECOMMUNICATIONS -- 1.86%
AT&T Corp. 61,625 3,701,352
------------
TOBACCO -- 0.86%
RJR Nabisco Holdings Corp. 61,410 1,707,966
------------
TRANSPORTATION -- 1.05%
CNF Transportation, Inc. 54,000 2,085,750
------------
TOTAL COMMON STOCKS
(cost $86,973,904) 110,736,595
------------
PREFERRED STOCKS -- 2.87%
INDUSTRIAL AND COMMERCIAL SERVICES -- 2.87%
Cendant Corp., 7.75% 138,700 5,712,706
------------
TOTAL PREFERRED STOCKS
(cost $4,937,304) 5,712,706
------------
DOMESTIC CORPORATE BONDS -- 28.38%
AEROSPACE & DEFENSE -- 1.14%
Raytheon Co.
6.45%, Notes, 8/15/02 $ 2,250,000 2,276,708
------------
AIRLINES -- 2.01%
Continental Airlines, Inc.
7.82%, Pass-Thru Certificates, 4/15/15 3,700,221 4,002,344
------------
BROADCASTING & MEDIA -- 1.89%
A.H. Belo Corp.
7.125%, Sr. Notes, 6/01/07 3,600,000 3,766,932
------------
CONSUMER STAPLES -- 1.84%
Avon Products, Inc.
6.55%, Notes, 8/01/07 3,600,000 3,654,288
------------
</TABLE>
20
<PAGE>
NORTHSTAR INCOME & GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
ENERGY SERVICES -- 1.87%
Smith International, Inc.
7.00%, Sr. Notes, 9/15/07 $ 3,600,000 $ 3,713,796
------------
FINANCE & BANKING -- 10.65%
Bear Stearns Co., Inc.
6.75%, Notes, 12/15/07 3,600,000 3,663,072
Chase Manhattan Corp.
7.25%, Subordinated Notes, 6/01/07 2,700,000 2,853,954
First Union Corp.
7.50%, Subordinated Notes, 7/15/06 3,600,000 3,854,232
Fleet Financial Group, Inc.
7.19%, Subordinated Notes, 10/02/12 3,600,000 3,681,144
General Motors Acceptance Corp.
6.125%, Notes, 1/22/08 3,600,000 3,528,684
Penn Power & Light Capital Funding, Inc.
6.79%, Company Guarantee, 11/22/04 3,600,000 3,622,392
------------
21,203,478
------------
PHARMACEUTICAL -- 0.93%
American Home Products
7.90%, Notes, 2/15/05 1,700,000 1,854,088
------------
RETAIL -- 1.62%
J.C. Penney Co., Inc.
7.60%, Notes, 4/01/07 3,000,000 3,226,680
------------
TECHNOLOGY -- 1.85%
International Business Machines Corp.
6.45%, Notes, 8/01/07 3,600,000 3,679,812
------------
TELECOMMUNICATIONS -- 1.47%
Worldcom, Inc.
7.75%, Sr. Notes, 4/01/07 2,700,000 2,923,101
------------
UTILITIES -- 3.11%
Enron Corp.
7.00%, Sr. Debentures, 8/15/23 3,600,000 3,440,700
IES Utilities, Inc.
6.625%, Debentures, 8/01/09 2,700,000 2,737,962
------------
6,178,662
------------
TOTAL DOMESTIC CORPORATE BONDS
(cost $55,153,099) 56,479,889
------------
U.S. GOVERNMENT AND AGENCIES -- 11.35%
Fannie Mae
7.00%, 7/17/07 1,600,000 1,618,800
7.33%, 6/19/07 3,600,000 3,671,820
Federal Home Loan Mortgage Corp.
7.05%, 12/03/07 3,600,000 3,618,828
U.S. Treasury Notes
6.50%, 10/15/06 13,150,000 13,667,874
------------
TOTAL U.S. GOVERNMENT AND AGENCIES
(cost $21,962,841) 22,577,322
------------
</TABLE>
21
<PAGE>
NORTHSTAR INCOME & GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 98.24%
(cost $169,027,148) $195,506,512
REPURCHASE AGREEMENT -- 1.41%
Agreement with State Street Bank and Trust bearing interest at
5.24% dated 4/30/98, to be repurchased 5/01/98 in the amount of
$2,807,409 and collateralized by $2,760,000 U.S. Treasury Bonds,
6.25% due 2/15/07, value $2,860,500
(cost $2,807,000) $ 2,807,000 2,807,000
OTHER ASSETS LESS LIABILITIES -- 0.35% 692,246
------------
NET ASSETS -- 100.00% $199,005,758
------------
------------
</TABLE>
@@ Foreign Security
See accompanying notes to financial statements.
22
<PAGE>
<TABLE>
<S> <C>
THOMAS OLE DIAL
</TABLE>
NORTHSTAR
HIGH TOTAL RETURN FUND II
THE MARKETS
o Real growth in the U.S. economy accelerated in the six months ended
April 30, 1998 from an annual rate of 3.1% to 4.2%. Despite this
"surprisingly" strong growth, the annual rate of inflation fell
from 2.1% to only 1.4% in the same period. This mix of rising
growth and declining inflation appears to be based on productivity
gains and competitive forces. Low inflation, strong growth and a
flight to safety in response to problems in Asia caused U.S. bond
yields to fall. Between 11/01/97 and 4/30/98, yields of 10- and
30-year Treasury bonds traded in about a 60 basis points (bps)
range. Their yields ended the period at 5.67% and 5.95%, down 16
bps and 20 bps, respectively. The positive interest-rate
environment, sustained growth, a recovery of confidence in
financial markets after troubling Asian events and large cash
inflows from investors helped boost the rate of return on high
yield bonds and small cap stock prices in the six months ended
4/30/98.
o Returns on high yield bonds from 11/01/97 to 4/30/98 were 5.68%
compared to 3.58% for all domestic bonds. Despite the flight to
quality that occurred in the first half of that period, in general,
lower-rated bonds outperformed higher-rated bonds. It also paid to
hold bonds with longer rather than shorter maturities.
o Emerging market bonds rose 11.23% in this six-month period. Prompt
IMF action, rapid reforms by borrowers and a restored sense that
Asia would stabilize helped emerging market bonds continue to
outperform.
THE FUND
o From 11/01/97 to 4/30/98, the total return of the Fund's Class A,
B, and C shares was 7.88%, 7.48%, and 7.49%, respectively; the
Lipper average for high yield funds was 6.34%. The Fund's higher
NAV and very strong new purchases (including exchanges from the
High Total Return Fund) caused its net assets to rise 258% during
the six-month period ended 4/30/98.
o The Fund's performance in this period was well above average,
despite the continuing receipt of very large amounts of cash to
invest, due to its exposure to lower-rated bonds and selective new
purchases.
o The Fund's limited holdings of stocks or equity rights attached to
bonds ("equity kickers") restrained the Fund's returns in the
six-months ended 4/30/98. The continued positive investment
environment will allow us to more aggressively buy equity positions
in this Fund going forward.
CURRENT STRATEGY
o Continue above-average exposure in non-cyclical industries and in
bonds that have equity kickers. Focus on investments in undervalued
bonds that have high yields and above-average potential for capital
appreciation.
o Although there is less market volatility now than recently, we
continue to be very cautious about holding large emerging market
positions and we will become more defensive if our economy's growth
slows.
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/98)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
NAME % FUND
<C> <S> <C>
1 Packaged Ice, Inc. 2.4%
2 Windsor Petroleum Transport Corp. 1.7
3 Diamond Holdings PLC 1.6
4 Aladdin Gaming Corp. 1.5
5 American Pacific Corp. 1.5
6 Bell Technology Group Ltd. 1.5
7 Viatel, Inc. 1.5
8 Breed Technologies, Inc. 1.4
9 IXC Communications 1.4
10 Silverleaf Resorts, Inc. 1.4
------
15.9%
------
------
</TABLE>
<TABLE>
<S> <C>
TOP 5 SECTORS
(by percentage of net assets)
----------------
Telecommunications 16.1%
--------
Oil & Gas 7.1%
------
Cable Television 6.7%
------
Hotel & Gaming 5.9%
-----
Consumer Services 5.0%
- ---------------------------------------------
TOTAL NET ASSETS $210,828,370
- ---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales charge)
<S> <C> <C> <C>
- ---------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- ---------------------------------------------
Class A 15.32% n/a 20.27%
- ---------------------------------------------
Class B 16.16% n/a 20.48%
- ---------------------------------------------
Class C 19.23% n/a 24.48%
- ---------------------------------------------
<CAPTION>
CUMULATIVE TOTAL RETURN
(do not reflect sales charge)
<S> <C> <C> <C>
- ---------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- ---------------------------------------------
Class A 25.47% n/a 26.15%
- ---------------------------------------------
Class B 24.59% n/a 25.48%
- ---------------------------------------------
Class C 24.59% n/a 25.48%
- ---------------------------------------------
</TABLE>
23
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
DOMESTIC BONDS & NOTES -- 66.04%
AEROSPACE & DEFENSE -- 1.66%
Aviation Sales Co. #
8.125%, Sr. Subordinated Notes, 2/15/08 $2,000,000 $1,960,000
Compass Aerospace Corp. #
10.125%, Sr. Subordinated Notes, 4/15/05 1,500,000 1,537,500
Willcox & Gibbs, Inc.
12.25%, Company Guarantee, 12/15/03 4,000 3,720
------------
3,501,220
------------
AUTOMOTIVE MANUFACTURING -- 2.90%
Breed Technologies, Inc. #
9.25%, Sr. Subordinated Notes, 4/15/08 3,000,000 3,045,000
Prestolite Electric, Inc. #
9.625%, Sr. Notes, 2/01/08 2,000,000 2,060,000
Walbro Corp. #
10.125%, Sr. Notes, 12/15/07 1,000,000 1,012,500
------------
6,117,500
------------
BROADCASTING -- 4.52%
Advanstar Communications # ++
9.25%, Sr. Subordinated Notes, 5/01/08 2,000,000 2,007,500
Brill Media Company LLC $ (1)
7.50%, Units, 12/15/07 3,000 2,865,000
Lin Television Corp. #
8.375%, Sr. Subordinated Notes, 3/01/08 2,500,000 2,500,000
Unisite, Inc. $ (2)
13.00%, Units, 12/15/04 2,064 2,163,278
------------
9,535,778
------------
CABLE TELEVISION -- 2.82%
Century Communications Corp. #
0%, Sr. Discount Notes, 1/15/08 1,800,000 796,500
EchoStar Satellite Broadcasting Corp. $
13.125%, Sr. Secured Discount Notes, 3/15/04 1,007,000 921,405
Heartland Wireless Communications, Inc. *@
14.00%, Sr. Notes, 10/15/04 4,000 1,220
Medicom LLC #
8.50%, Sr. Notes, 4/15/08 2,500,000 2,481,250
UIH Australia/Pacific, Inc. $
14.00%, Sr. Discounted Notes, 5/15/06 2,500,000 1,646,875
Wireless One, Inc.
13.00%, Sr. Notes, 10/15/03 500,000 102,500
------------
5,949,750
------------
CAPITAL GOODS MANUFACTURING -- 1.84%
Graham Packaging Holdings Co. # $
10.75%, Sr. Discount Notes, 1/15/09 3,000,000 1,860,000
Indesco International, Inc. #
9.75%, Sr. Subordinated Notes, 4/15/08 2,000,000 2,010,000
------------
3,870,000
------------
</TABLE>
24
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
CHEMICALS -- 3.29%
American Pacific Corp. #
9.25%, Sr. Notes, 3/01/05 $3,000,000 $3,120,000
Hydrochem Industrial Services, Inc.
10.375%, Company Guarantee, 8/01/07 300,000 311,625
Simcala, Inc. #
9.625%, Sr. Notes, 4/15/06 1,500,000 1,513,125
Sterling Chemicals, Inc.
11.25%, Sr. Subordinated Notes, 4/01/07 2,000,000 1,985,000
------------
6,929,750
------------
COMPUTER/ELECTRONICS -- 0.74%
Details, Inc.
10.00%, Sr. Subordinated Notes, 11/15/05 1,000,000 1,030,000
Electronic Retailing Systems International, Inc. $
13.125%, Sr. Discount Notes, 2/01/04 1,000,000 525,000
------------
1,555,000
------------
CONSUMER PRODUCTS -- 4.99%
Amscan Holdings, Inc.
9.875%, Sr. Subordinated Notes, 12/15/07 2,000,000 2,130,000
Decora Industries, Inc. #
11.00%, Secured Notes, 5/01/05 2,000,000 1,962,500
Packaged Ice, Inc. #
9.75%, Sr. Notes, 2/01/05 5,000,000 5,075,000
Syratech Corp.
11.00%, Sr. Notes, 4/15/07 1,500,000 1,342,500
------------
10,510,000
------------
DIVERSIFIED FINANCIAL SERVICES -- 2.01%
Resource America, Inc.
12.00%, Sr. Notes, 8/01/04 1,500,000 1,601,250
Societe General Real Estate Co. LLC # (3)
7.64%, Notes, 12/29/49 2,700,000 2,639,250
------------
4,240,500
------------
ENERGY -- 1.18%
Michael Petroleum Corp. #
11.50%, Sr. Notes, 4/01/05 2,500,000 2,487,500
------------
ENTERTAINMENT/FILM -- 1.91%
Ascent Entertainment Group, Inc.
11.875%, Sr. Discount Notes, 12/15/04 4,000,000 2,540,000
Production Resource LLC #
11.50%, Sr. Subordinated Notes, 1/15/08 1,500,000 1,492,500
------------
4,032,500
------------
FOOD/BEVERAGE/TOBACCO -- 0.65%
Standard Commercial Corp.
8.875%, Company Guarantee, 8/01/05 350,000 355,250
Tom's Foods, Inc.
10.50%, Sr. Notes, 11/01/04 1,000,000 1,010,000
------------
1,365,250
------------
</TABLE>
25
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
HEALTHCARE -- 1.63%
Kinetic Concepts, Inc. #
9.625%, Sr. Subordinated Notes, 11/01/07 $1,000,000 $1,025,000
Packard Bioscience, Inc.
9.375%, Sr. Subordinated Notes, 3/01/07 2,500,000 2,418,750
------------
3,443,750
------------
HOTEL & GAMING -- 5.90%
Aladdin Gaming Corp. $ (4)
13.50%, Units, 3/01/10 6,000 3,075,000
Ameristar Casinos, Inc.
8.00%, Sr. Secured Notes, 1/02/04 2,000,000 1,840,000
Ameristar Casinos, Inc.
10.50%, Company Guarantee, 8/01/04 750,000 800,625
Hard Rock Hotel, Inc. #
9.25%, Sr. Subordinated Notes, 4/01/05 2,000,000 2,050,000
Lady Luck Gaming Finance Corp.
11.875%, 1st Mortgage Notes, 3/01/01 2,500,000 2,606,250
Venetian Casino Resort LLC #
12.25%, Mortgage Backed Notes, 11/15/04 2,000,000 2,075,000
------------
12,446,875
------------
INSURANCE -- 0.75%
Superior National Insurance Group, Inc.
10.75%, Company Guarantee, 12/01/17 15,000 1,590,000
------------
LEISURE -- 2.22%
Cobblestone Holdings, Inc.
0%, Sr. Notes, 6/01/04 1,250,000 635,938
Silverleaf Resorts, Inc.
10.50%, Sr. Subordinated Notes, 4/01/08 3,000,000 3,015,000
Source Media, Inc. #
12.00%, Sr. Notes, 11/01/04 1,000,000 1,035,000
------------
4,685,938
------------
MANUFACTURING -- 0.73%
Numatics, Inc. #
9.625%, Sr. Subordinated Notes, 4/01/08 1,500,000 1,528,125
------------
OIL & GAS -- 5.80%
Dailey International, Inc. #
9.50%, Sr. Notes, 2/15/08 2,200,000 2,222,000
Forman Petroleum Corp.
13.50%, Company Guarantee, 6/01/04 2,000,000 2,050,000
Transamerican Energy Corp.
11.50%, Sr. Secured Notes, 6/15/02 2,000,000 1,980,000
Transamerican Energy Corp. $
13.00%, Sr. Secured Discount Notes, 6/15/02 1,500,000 1,275,000
Transamerican Refining Corp. (5)
16.00%, Units, 6/30/03 1,000 1,080,000
Windsor Petroleum Transport Corp. #
7.84%, Notes, 1/15/21 4,000,000 3,620,000
------------
12,227,000
------------
</TABLE>
26
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PUBLISHING/PRINTING -- 1.22%
Garden State Newspapers, Inc.
8.75%, Sr. Subordinated Notes, 10/01/09 $2,500,000 $2,575,000
------------
SERVICES -- 4.35%
Bell Technology Group Ltd. # (6)
13.00%, Units, 5/01/05 3,000 3,075,000
Comforce Corp. & (7)
15.00%, Units, 12/01/09 2,500 2,750,000
Mentus Media Corp. & # (8)
12.00%, Units, 2/01/03 1,500 1,533,750
NBC Acquisition Corp. # $
10.75%, Debentures, 2/15/09 3,000,000 1,815,000
Sabreliner Corp.
12.50%, Sr. Notes, 4/15/03 4,000 4,240
------------
9,177,990
------------
SHIPPING -- 1.19%
Ultrapetrol Bahamas Ltd. #
10.50%, 1st Mortgage Notes, 4/01/08 2,500,000 2,512,500
------------
SPECIALTY RETAILING -- 1.92%
Pamida, Inc.
11.75%, Sr. Subordinated Notes, 3/15/03 1,000,000 1,035,000
Phillips Van-Heusen Corp. #
9.50%, Sr. Subordinated Notes, 5/01/08 3,000,000 3,003,750
------------
4,038,750
------------
STEEL -- 0.89%
Geneva Steel Co.
9.50%, Sr. Notes, 1/15/04 2,000,000 1,880,000
------------
TELECOMMUNICATIONS -- 10.15%
Hyperion Telecommunications, Inc.
12.25%, Sr. Notes, 9/01/04 1,000,000 1,115,000
International Wireless Commerce
0%, Sr. Discount Notes, 8/15/01 1,500,000 547,500
Iridium Capital Corp.
13.00%, Sr. Notes, 7/15/05 2,000,000 2,200,000
ITC Deltacom, Inc.
11.00%, Sr. Notes, 6/01/07 3,000 3,435
IXC Communications, Inc. #
9.00%, Sr. Subordinated Notes, 4/15/08 3,000,000 3,022,500
Level 3 Communications, Inc. #
9.125%, Sr. Notes, 5/01/08 3,000,000 2,977,500
Nextlink Communications, Inc. # $
9.45%, Sr. Discount Notes, 4/15/08 3,500,000 2,222,500
RCN Corp.
10.00%, Sr. Notes, 10/15/07 1,000,000 1,065,000
RCN Corp. # $
9.80%, Sr. Discount Notes, 2/15/08 2,500,000 1,581,250
TCI Satellite Entertainment, Inc. # $
12.25%, Sr. Discount Notes, 2/15/07 2,000,000 1,420,000
Transtel Pass-Thru Trust SA #
12.50%, Pass-Thru Trust Certificate, 11/01/07 1,500,000 1,477,500
</TABLE>
27
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- CONTINUED
Viatel, Inc. (9) #
11.25%, Units, 4/15/08 $ 3,000 $3,195,000
Winstar Equipment II Corp.
12.50%, Company Guarantee, 3/15/04 500,000 563,750
------------
21,390,935
------------
UTILITIES -- 0.78%
Panda Funding Corp.
11.625%, Notes, 8/20/12 1,496,933 1,639,141
------------
TOTAL DOMESTIC BONDS & NOTES
(cost $137,669,454) 139,230,752
------------
FOREIGN BONDS & NOTES -- 19.17%
CABLE TELEVISION -- 3.35%
Diamond Holdings PLC
10.00%, Company Guarantee, 2/01/08 2,000,000 3,437,398
Pratama Datakom Asia BV #
12.75%, Company Guarantee, 7/15/05 2,000,000 950,000
Star Choice Communications, Inc. (10)
13.00%, Units, 12/15/05 2,500 2,681,250
------------
7,068,648
------------
FOOD/BEVERAGE/TOBACCO -- 0.93%
Grupo Azucarero Mexico SA #
11.50%, Sr. Notes, 1/15/05 2,000,000 1,950,000
------------
METALS & MINING -- 1.91%
Great Central Mines Ltd. #
8.875%, Sr. Notes, 4/01/08 3,000,000 3,011,250
Murrin Murrin Holdings Property Ltd. #
9.375%, Sr. Notes, 8/31/07 1,000,000 1,005,000
------------
4,016,250
------------
OIL & GAS -- 1.31%
Hurricane Hydrocarbons #
11.75%, Sr. Notes, 11/01/04 2,750,000 2,753,437
------------
PAPER -- 0.76%
Ainsworth Lumber &
12.50%, Sr. Secured Notes, 7/15/07 1,500,000 1,608,750
------------
SERVICES -- 1.26%
Autopistas Del Sol SA #
10.25%, Sr. Notes, 8/01/09 500,000 491,250
Guangzhou Shenzhen Superhighway Holdings
10.25%, Sr. Notes, 8/15/07 500,000 392,500
Localiza Rent A Car #
10.25%, Notes, 10/01/05 2,000,000 1,770,000
------------
2,653,750
------------
SHIPPING -- 3.22%
Alpha Shipping PLC #
9.50%, Sr. Notes, 2/15/08 3,000,000 2,895,000
Equimar Shipholdings Ltd.
9.875%, Company Guarantee, 7/01/07 2,700,000 2,551,500
</TABLE>
28
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units/Shares Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
SHIPPING -- CONTINUED
Navigator Gas Transport # (11)
12.00%, Units, 6/30/07 300 $342,000
Pegasus Shipping Hellas Ltd. #
11.875%, Company Guarantee, 11/15/04 $1,000,000 1,010,000
------------
6,798,500
------------
TELECOMMUNICATIONS -- 5.42%
Esprit Telecom Group PLC
11.50%, Sr. Notes, 12/15/07 2,000,000 2,190,000
Microcell Telecommunications, Inc. $
11.125%, Sr. Discount Notes, 10/15/07 1,400,000 640,057
Millicom International Cellular SA $
13.50%, Sr. Discounted Notes, 6/01/06 3,000,000 2,362,500
Occidente Y Caribe Celular SA $
14.00%, Sr. Discount Notes, 3/15/04 7,000 6,055
Paging Network Do Brasil SA
13.50%, Sr. Notes, 6/06/05 1,000,000 1,002,500
Poland Telecom Finance # (12)
14.00%, Units, 12/01/07 2,000 2,235,000
RSL Communications PLC $
10.125%, Sr. Discount Notes, 3/15/08 8,900,000 3,000,474
------------
11,436,586
------------
UTILITIES -- 1.01%
CE Casecnan Water & Energy Co.
11.95%, Sr. Secured Notes, 11/15/10 2,000,000 2,135,000
------------
TOTAL FOREIGN BONDS & NOTES
(cost $39,676,524) 40,420,921
------------
CONVERTIBLE BONDS -- 0.61%
AEROSPACE & DEFENSE -- 0.00%
Simula, Inc.
8.00%, Sr. Subordinated Notes, 5/01/04 4,000 4,580
------------
FOOD/BEVERAGE/TOBACCO -- 0.61%
International Fast Food Corp. &
11.00%, Sr. Subordinated Notes, 10/31/07 1,750,000 1,273,125
------------
TOTAL CONVERTIBLE BONDS
(cost $1,342,522) 1,277,705
------------
COMMON STOCKS -- 0.00%
TELECOMMUNICATIONS -- 0.00%
Jordan Telecommunications Products, Inc. 250 6,625
Paging Do Brazil Holdings Co. LLC @ 1,000 0
------------
TOTAL COMMON STOCKS
(cost $0) 6,625
------------
PREFERRED STOCKS -- 4.66%
CABLE TELEVISION -- 0.57%
Echostar Communications Corp., 12.125% & 10,600 1,200,450
------------
FOOD/BEVERAGE/TOBACCO -- 0.73%
North Atlantic Trading, Inc., 12.00% & 58,349 1,546,249
------------
</TABLE>
29
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares/Prinicipal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
SUPERMARKETS -- 1.23%
Nebco Evans Holding Co., 11.25% & # 25,000 $ 2,587,500
------------
TELECOMMUNICATIONS -- 0.53%
Hyperion Telecommunications, Inc., 12.875% & 7,470 855,315
Jordan Telecommunication Products, Inc., 13.25% & 2,500 265,000
------------
1,120,315
------------
TEXTILE/APPAREL -- 1.09%
Anvil Holdings, Inc., 13.00% & 93,260 2,296,527
------------
UTILITIES -- 0.51%
International Utility Structures, Inc., 13.00% & # 10,000 1,075,000
------------
TOTAL PREFERRED STOCKS
(cost $9,379,379) 9,826,041
------------
WARRANTS -- 0.17%
COMPUTER/ELECTRONICS -- 0.01%
Electronic Retailing Systems International, Inc.,
(expires 2/01/04) 1,000 20,000
------------
CONSUMER PRODUCTS -- 0.05%
Packaged Ice, Inc., (expires 4/15/04) 1,005 100,500
------------
FOOD/BEVERAGE/TOBACCO -- 0.03%
North Atlantic Trading, Inc., (expires 6/15/07) 550 55,000
------------
HEALTHCARE -- 0.07%
Intracel Corp., (expires 4/17/03) 49,066 159,465
------------
OIL & GAS -- 0.01%
Forman Petroleum Corp., (expires 6/01/04) 2,000 20,000
------------
TELECOMMUNICATIONS -- 0.00%
Globalstar Telecommunications Ltd., (expires 2/15/04) 5 726
International Wireless Communications Holdings, Inc.
#, (expires 8/15/01) 1,500 15
Iridium World Communications, Inc., (expires 7/25/05) 25 5,875
Occidente Y Caribe Celular SA, (expires 3/15/04) 28 0
UNIFI Communications, Inc. #, (expires 2003) 505 0
------------
6,616
------------
TOTAL WARRANTS
(cost $296,872) 361,581
------------
TOTAL INVESTMENT SECURITIES -- 90.65%
(cost $188,364,751) 191,123,625
------------
REPURCHASE AGREEMENT -- 1.16%
Agreement with State Street Bank and Trust bearing
interest at 5.24% dated 4/30/98, to be repurchased
5/01/98 in the amount of $2,444,356 and collateralized
by $1,875,000 U.S. Treasury Bonds, 8.875% due 8/15/17,
value $2,496,126
(cost $2,444,000) $2,444,000 2,444,000
OTHER ASSETS LESS LIABILITIES -- 8.19% 17,260,745
------------
NET ASSETS -- 100.00% $210,828,370
------------
------------
</TABLE>
30
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND II
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
# Sales restricted to qualified institutional investors.
++ Private Placement.
$ Step bond.
* Defaulted security.
& Payment-in-kind security.
@ Non-income producing security.
1) A unit consists of $1,000 par value Sr. Notes, 7.50% due 12/15/07, and
Appreciation Notes.
2) A unit consists of $1,000 par value Subordinated Accrual Notes, 13.00% due
12/15/04, and 0.4858 warrants.
3) Variable rate security. Rate as of April 30, 1998.
4) A unit consists of $1,000 par value Sr. Discount Notes, 13.50% due 3/01/10,
and 10 warrants.
5) A unit consists of $1,000 par value Sr. Subordinated Notes, 16.00% due
6/30/03, and 1 warrant.
6) A unit consists of $1,000 par value Sr. Notes, 13.00% due 5/01/05, and 1
warrant.
7) A unit consists of $1,000 par value Sr. Secured Debentures 15.00%, due
12/01/09, and 8.45 warrants.
8) A unit consists of $1,000 par value Sr. Secured Notes 12.00%, due 2/01/03,
and 2.78311 warrants.
9) A unit consists of $1,000 par value Sr. Notes 11.25%, due 4/14/08, and
0.483 preferred shares.
10) A unit consists of $1,000 par value Sr. Secured Notes 13.00%, due 12/15/05,
and 23.16 warrants.
11) A unit consists of $1,000 par value Notes 12.00%, due 6/30/07, and 7.66
warrants.
12) A unit consists of $1,000 par value Sr. Notes 14.00%, due 12/01/07, and 1
warrant.
See accompanying notes to financial statements.
31
<PAGE>
NORTHSTAR
HIGH TOTAL RETURN FUND
THOMAS OLE DIAL
THE MARKETS
o Real growth in the U.S. economy accelerated in the six months
ended April 30, 1998 from an annual rate of 3.1% to 4.2%. Despite
this "surprisingly" strong growth, the annual rate of inflation
fell from 2.1% to only 1.4% in the same period. This mix of rising
growth and declining inflation appears to be based on productivity
gains and competitive forces. Low inflation, strong growth and a
flight to safety in response to problems in Asia caused U.S. bond
yields to fall. Between 11/01/97 and 4/03/98, yields of 10- and
30-year Treasury bonds traded in about a 60 basis points (bps)
range. Their yields ended the period at 5.67% and 5.95%, down
16 bps and 20 bps, respectively. The positive interest-rate
environment, sustained growth, a recovery of confidence in
financial markets after troubling Asian events and large cash
inflows from investors helped boost the rate of return on high
yield bonds and small cap stock prices in the six months ended
4/30/98.
o Returns on high yield bonds from 11/01/97 to 4/30/98 were 5.68%
compared to 3.58% for all domestic bonds. Despite the flight to
quality that occurred in the first half of that period, in general,
lower-rated bonds outperformed higher-rated bonds. It also paid to
hold bonds with longer rather than shorter maturities.
o Emerging market bonds rose 11.23% in this six-month period. Prompt
IMF action, rapid reforms by borrowers and a restored sense that
Asia would stabilize helped emerging market bonds continue to
outperform.
THE FUND
o From 11/01/97 to 4/30/98, the total return of the Fund's Class A,
B, and C shares were 3.86%, 3.49%, and 3.49%, respectively; the
Lipper average for high yield funds was 6.34%. The Fund's NAV
increased, but redemptions and exchanges into High Total Return
Fund II caused its net assets to fall 3.4% during the six-month
period ended 4/30/98.
o The Fund's returns from November through January were impacted by
substantial price declines in several previously profitable
investments in Indonesian and telecommunication bonds. Improvements
in other existing positions and astute new purchases enabled the
Fund's returns to improve substantially from February through April
1998. That turnaround was aided by rising stock prices, which
directly boosted the values of the Fund's equity positions and
improved many issuers' credit fundamentals.
o Many of the stocks and equity rights attached to bonds ("equity
kickers") held by the Fund rose in value significantly during this
period and are poised to make more contributions as their issuers
keep growing.
CURRENT STRATEGY
o Continue above-average exposure in non-cyclical industries and in
bonds that have equity kickers. Focus on investments in undervalued
bonds that have high yields and above-average potential for capital
appreciation.
o Given the significant reduction in market volatility and the
reversal in the flight to quality related to Asia, we will be less
defensive than we recently were. However, we remain ready to raise
cash if our economy slows.
- --------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE AS OF 4/30/98) TOTAL NET ASSETS $859,978,713
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
NAME % FUND
<C> <S> <C>
1 Packaged Ice, Inc. 2.0%
2 Ainsworth Lumber Ltd. 1.9
3 Iridium Capital Corp. 1.9
4 North American Trading, Inc. 1.9
5 Source Media, Inc. 1.9
6 Anacomp, Inc. 1.8
7 Occidente Y Caribe Celular SA 1.8
8 Panda Global Energy Co. 1.8
9 Capstar Broadcasting Partners 1.7
EchoStar Satellite
10 Broadcasting Corp. 1.6
------
18.3%
------
------
</TABLE>
<TABLE>
<S> <C>
TOP 5 SECTORS
(by percentage of net assets)
---------------
Telecommunications 19.0%
------
Services 8.2%
------
Broadcasting 8.2%
Food, Beverage, -----
Tobacco 7.5%
----
Cable Television 6.6%
</TABLE>
<TABLE>
<CAPTION>
SEC AVERAGE ANNUAL RATES OF RETURN
(at maximum applicable sales charge)
<S> <C> <C> <C>
- ---------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- ---------------------------------------------
Class A 9.01% n/a 11.68%
- ---------------------------------------------
Class B 8.19% n/a 11.38%
- ---------------------------------------------
Class C 9.32% n/a 15.35%
- ---------------------------------------------
<CAPTION>
CUMULATIVE TOTAL RETURN
(do not reflect sales charge)
<S> <C> <C> <C>
- ---------------------------------------------
<CAPTION>
Inception 5 years 1 year
<S> <C> <C> <C>
- ---------------------------------------------
Class A 54.54% n/a 17.21%
- ---------------------------------------------
Class B 41.24% n/a 16.38%
- ---------------------------------------------
Class C 44.25% n/a 16.35%
- ---------------------------------------------
</TABLE>
32
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
DOMESTIC BONDS & NOTES -- 53.96%
AEROSPACE & DEFENSE -- 1.09%
Willcox & Gibbs, Inc.
12.25%, Company Guarantee, 12/15/03 $10,096,000 $ 9,389,280
------------
BROADCASTING -- 2.88%
Advanstar Communications, Inc. # ++
9.25%, Sr. Subordinated Notes, 5/01/08 2,000,000 2,007,500
Brill Media Co. LLC $ (1)
7.50%, Units, 12/15/07 9,800 9,359,000
Unisite, Inc. $ (2)
13.00%, Units, 12/15/04 12,798 13,413,584
------------
24,780,084
------------
CABLE TELEVISION -- 3.98%
21st Century Telecom Group, Inc. $ #
12.25%, Sr. Discount Notes, 2/15/08 13,500,000 7,695,000
CAI Wireless Systems, Inc.
12.25%, Sr. Discount Notes, 9/15/02 7,500,000 1,537,500
CS Wireless Systems, Inc. $
11.375%, Sr. Discount Notes, 3/01/06 12,000,000 2,460,000
EchoStar Satellite Broadcasting Corp. $
13.125%, Sr. Secured Discount Notes, 3/15/04 14,993,000 13,718,595
Heartland Wireless Communications, Inc. * @
13.00%, Sr. Notes, 4/15/03 12,800,000 3,264,000
Heartland Wireless Communications, Inc. * @
14.00%, Sr. Notes, 10/15/04 7,000,000 2,135,000
UIH Australia/Pacific, Inc. $
14.00%, Sr. Discounted Notes, 5/15/06 2,500,000 1,646,875
Wireless One, Inc.
13.00%, Sr. Notes, 10/15/03 8,500,000 1,742,500
------------
34,199,470
------------
CAPITAL GOODS MANUFACTURING -- 0.92%
Alvey Systems, Inc.
11.375%, Sr. Subordinated Notes, 1/31/03 7,350,000 7,882,875
------------
COMPUTER/ELECTRONICS -- 1.57%
Electronic Retailing Systems International, Inc. $
13.25%, Sr. Discount Notes, 2/01/04 25,750,000 13,518,750
------------
CONSUMER PRODUCTS -- 3.72%
Decora Industries, Inc. #
11.00%, Secured Notes, 5/01/05 4,000,000 3,925,000
Packaged Ice, Inc. #
9.75%, Sr. Notes, 2/01/05 17,200,000 17,458,000
Syratech Corp.
11.00%, Sr. Notes, 4/15/07 11,850,000 10,605,750
------------
31,988,750
------------
CONTAINERS AND PACKAGING -- 0.98%
Packaging Resources, Inc. #
13.00%, Sr. Notes, 6/30/03 8,829,163 8,431,850
------------
</TABLE>
33
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL SERVICES -- 2.68%
Central Rents, Inc.
12.875%, Sr. Notes, 12/15/03 $10,550,000 $10,761,000
Resource America, Inc.
12.00%, Sr. Notes, 8/01/04 11,500,000 12,276,250
------------
23,037,250
------------
ENTERTAINMENT/FILM -- 0.98%
Production Resource LLC #
11.50%, Sr. Subordinated Notes, 1/15/08 8,500,000 8,457,500
------------
FOOD/BEVERAGE/TOBACCO -- 2.69%
American Restaurant Group, Inc. #
11.50%, Sr. Notes, 2/15/03 3,900,000 4,017,000
Colorado Prime Corp.
12.50%, Company Guarantee, 5/01/04 5,000,000 5,025,000
North Atlantic Trading, Inc.
11.00%, Sr. Notes, 6/15/04 3,100,000 3,169,750
RAB Enterprises, Inc. #
10.50%, Sr. Notes, 5/01/05 3,000,000 3,022,500
Tom's Foods, Inc.
10.50%, Sr. Notes, 11/01/04 7,800,000 7,878,000
------------
23,112,250
------------
HEALTHCARE -- 1.48%
Intracel Corp. ++
11.00%, Sr. Notes, 12/31/00 7,404,253 6,460,211
Unilab Corp.
11.00%, Sr. Notes, 4/01/06 3,000,000 3,210,000
Universal Hospital Services, Inc. #
10.25%, Sr. Notes, 3/01/08 3,000,000 3,090,000
------------
12,760,211
------------
HOTEL & GAMING -- 3.76%
Aladdin Gaming Corp. $ (3)
13.50%, Units, 3/01/10 10,750 5,509,375
Ameristar Casinos, Inc.
8.00%, Sr. Secured Notes, 1/02/04 11,650,000 10,718,000
Lady Luck Gaming Finance Corp.
11.875%, 1st Mortgage Notes, 3/01/01 2,500,000 2,606,250
Venetian Casino Resort LLC #
12.25%, Mortgage Notes, 11/15/04 13,000,000 13,487,500
------------
32,321,125
------------
INSURANCE -- 0.72%
Americo Life, Inc.
9.25%, Sr. Subordinated Notes, 6/01/05 6,000,000 6,210,000
------------
LEISURE -- 2.69%
Cobblestone Holdings, Inc.
0%, Sr. Notes, 6/01/04 6,500,000 3,306,875
Silverleaf Resorts, Inc.
10.50%, Sr. Subordinated Notes, 4/01/08 7,000,000 7,035,000
</TABLE>
34
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LEISURE -- CONTINUED
Source Media, Inc. #
12.00%, Sr. Notes, 11/01/04 $ 7,500,000 $7,762,500
United States Interactive LLC
12.00%, Sr. Secured Notes, 4/17/05 5,000,000 5,025,000
------------
23,129,375
------------
MANUFACTURING -- 0.83%
Jordan Industries, Inc. $
11.75%, Sr. Subordinated Debentures, 4/01/09 10,865,000 7,170,900
------------
OIL & GAS -- 2.40%
Dailey International, Inc. #
9.50%, Sr. Notes, 2/15/08 3,000,000 3,030,000
Forman Petroleum Corp.
13.50%, Company Guarantee, 6/01/04 5,000,000 5,125,000
Transamerican Energy Corp. $
13.00%, Sr. Secured Discount Notes, 6/15/02 5,500,000 4,675,000
Transamerican Refining Corp. (4)
16.00%, Units, 6/30/03 1,750 1,890,000
Windsor Petroleum Transport Corp. #
7.84%, Notes, 1/15/21 6,500,000 5,882,500
------------
20,602,500
------------
PUBLISHING/PRINTING -- 0.78%
Garden State Newspapers, Inc.
8.75%, Sr. Subordinated Notes, 10/01/09 6,500,000 6,695,000
------------
SERVICES -- 6.86%
Anacomp, Inc.
10.875%, Sr. Subordinated Notes, 4/01/04 14,250,000 15,318,750
Bell Technology Group Ltd. # (5)
13.00%, Units, 5/01/05 6,000 6,150,000
Comforce Corp. & (6)
15.00%, Units, 12/01/09 8,500 9,350,000
ICF Kaiser International, Inc. $
13.00%, Sr. Subordinated Notes, 12/31/03 9,154,000 9,657,470
Mentus Media Corp. & # (7)
12.00%, Units, 2/01/03 7,000 7,157,500
Sabreliner Corp.
12.50%, Sr. Notes, 4/15/03 2,000,000 2,120,000
Verio, Inc. # (8)
13.50%, Units, 6/15/04 6,900 9,246,000
------------
58,999,720
------------
SHIPPING -- 0.61%
Ultrapetrol Bahamas Ltd. #
10.50%, 1st Mortgage Notes, 4/01/08 5,200,000 5,226,000
------------
SPECIALTY RETAILING -- 0.65%
Pamida, Inc.
11.75%, Sr. Subordinated Notes, 3/15/03 5,400,000 5,589,000
------------
STEEL -- 0.66%
Geneva Steel Co.
9.50%, Sr. Notes, 1/15/04 6,000,000 5,640,000
------------
</TABLE>
35
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS -- 9.55%
Advanced Radio Telecom Corp.
14.00%, Sr. Notes, 2/15/07 $ 9,000,000 $9,945,000
Cellnet Data Systems, Inc. $
14.00%, Sr. Discount Notes, 10/01/07 10,000,000 5,625,000
ICG Holdings, Inc. $
13.50%, Sr. Discount Notes, 9/15/05 7,000,000 6,037,500
International Wireless Commerce
0%, Sr. Discount Notes, 8/15/01 8,500,000 3,102,500
Iridium Capital Corp.
13.00%, Sr. Notes, 7/15/05 14,500,000 15,950,000
Level 3 Communications, Inc. #
9.125%, Sr. Notes, 5/01/08 3,500,000 3,473,750
McCaw International Ltd.
0%, Sr. Discount Notes, 4/15/07 9,500,000 6,507,500
RCN Corp.
10.00%, Sr. Notes, 10/15/07 1,000,000 1,065,000
RCN Corp. # $
9.80%, Sr. Discount Notes, 2/15/08 8,100,000 5,123,250
RCN Corp. $
11.125%, Sr. Discount Notes, 10/15/07 12,500,000 8,406,250
SA Telecommunications, Inc. * @
10.00%, Sr. Debentures, 8/15/06 3,800,000 760,000
Transtel Pass-Thru Trust SA #
12.50%, Pass-Thru Trust Certificate, 11/01/07 7,500,000 7,387,500
Viatel, Inc. (9) #
11.25%, Units, 4/15/08 4,000 4,260,000
Winstar Equipment II Corp.
12.50%, Company Guarantee, 3/15/04 4,000,000 4,510,000
------------
82,153,250
------------
TOYS -- 0.55%
Hedstrom Holdings, Inc. # $
12.00%, Sr. Discounted Notes, 6/01/09 7,500,000 4,715,625
------------
TRANSPORTATION -- 0.42%
Ameritruck Distribution Corp.
12.25%, Sr. Subordinated Notes, 11/15/05 4,000,000 3,620,000
------------
UTILITIES -- 0.51%
Panda Funding Corp.
11.625%, Notes, 8/20/12 3,991,820 4,371,043
------------
TOTAL DOMESTIC BONDS & NOTES
(cost $490,907,415) 464,001,808
------------
FOREIGN BONDS & NOTES -- 23.01%
CABLE TELEVISION -- 2.08%
Diamond Holdings PLC
10.00%, Company Guarantee, 2/01/08 4,000,000 6,874,795
Multicanal Participacoes SA
12.625%, Sr. Notes, 6/18/04 2,000,000 2,195,000
Pratama Datakom Asia BV #
12.75%, Company Guarantee, 7/15/05 9,625,000 4,571,875
Star Choice Communications, Inc. (10)
13.00%, Units, 12/15/05 4,000 4,290,000
------------
17,931,670
------------
</TABLE>
36
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
CHEMICALS -- 0.38%
Tri Polyta Finance BV
11.375%, Co. Guarantee, 12/01/03 $ 5,000,000 $3,275,000
------------
CONSUMER PRODUCTS -- 0.04%
International Semi-Tech Corp. $
11.50%, Sr. Secured Discount Notes, 8/15/03 900,000 306,000
------------
ENTERTAINMENT/FILM -- 0.34%
TV Filme, Inc.
12.875%, Sr. Notes, 12/15/04 3,000,000 2,925,000
------------
FOOD/BEVERAGE/TOBACCO -- 1.59%
Grupo Azucarero Mexico SA #
11.50%, Sr. Notes, 1/15/05 14,000,000 13,650,000
------------
METALS & MINING -- 0.96%
Echo Bay Mines Ltd.
11.00%, Jr. Subordinated Debentures, 4/01/27 9,000,000 8,235,000
------------
OIL & GAS -- 1.28%
Hurricane Hydrocarbons #
11.75%, Sr. Notes, 11/01/04 11,000,000 11,013,750
------------
PAPER -- 2.26%
Ainsworth Lumber Ltd. &
12.50%, Sr. Secured Notes, 7/15/07 15,500,000 16,623,750
Pindo Deli Finance Mauritius Ltd. #
10.75%, Sr. Notes, 10/01/07 3,450,000 2,854,875
------------
19,478,625
------------
SERVICES -- 1.28%
Autopistas Del Sol SA #
10.25%, Sr. Notes, 8/01/09 2,950,000 2,898,375
Localiza Rent A Car #
10.25%, Notes, 10/01/05 9,150,000 8,097,750
------------
10,996,125
------------
SHIPPING -- 2.23%
Alpha Shipping PLC #
9.50%, Sr. Notes, 2/15/08 2,800,000 2,702,000
Equimar Shipholdings Ltd.
9.875%, Company Guarantee, 7/01/07 10,000,000 9,450,000
Pegasus Shipping Hellas Ltd. #
11.875%, Company Guarantee, 11/15/04 7,000,000 7,070,000
------------
19,222,000
------------
TELECOMMUNICATIONS -- 7.44%
Esprit Telecom Group PLC
11.50%, Sr. Notes, 12/15/07 2,000,000 2,190,000
Esprit Telecom Group PLC (11)
11.50%, Sr. Notes, 12/15/07 11,000,000 6,711,989
Globo Communicacoes E Participacoes #
10.625%, Sr. Notes, 12/05/08 2,000,000 2,025,000
Microcell Telecommunications, Inc. $
11.125%, Sr. Discount Notes, 10/15/07 8,350,000 3,817,485
</TABLE>
37
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Principal Amount/Units Value
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- CONTINUED
Millicom International Cellular SA $
13.50%, Sr. Discounted Notes, 6/01/06 $17,000,000 $13,387,500
Occidente Y Caribe Celular SA $
14.00%, Sr. Discount Notes, 3/15/04 18,011,000 15,579,515
Paging Network Do Brasil SA
13.50%, Sr. Notes, 6/06/05 1,000,000 1,002,500
Petersburg Long Distance, Inc. # $ (12)
14.00%, Units, 6/01/04 7,000 6,335,000
Poland Telecom Finance # (13)
14.00%, Units, 12/01/07 7,000 7,822,500
RSL Communications PLC $
10.125%, Notes, 3/15/08 15,100,000 5,090,691
------------
63,962,180
------------
UTILITIES -- 3.13%
CE Casecnan Water & Energy Co.
11.45%, Sr. Secured Notes, 11/15/05 2,000,000 2,077,500
CE Casecnan Water & Energy Co.
11.95%, Sr. Secured Notes, 11/15/10 8,800,000 9,394,000
Panda Global Energy Co.
12.50%, Company Guarantee, 4/15/04 16,000,000 15,440,000
------------
26,911,500
------------
TOTAL FOREIGN BONDS & NOTES
(cost $193,708,693) 197,906,850
------------
CONVERTIBLE BONDS -- 3.33%
AEROSPACE & DEFENSE -- 1.15%
Simula, Inc.
8.00%, Sr. Subordinated Notes, 5/01/04 4,496,000 5,147,920
Simula, Inc.
10.00%, Sr. Subordinated Notes, 9/15/99 4,250,000 4,794,298
------------
9,942,218
------------
FOOD/BEVERAGE/TOBACCO -- 1.24%
International Fast Food Corp. &
11.00%, Sr. Subordinated Notes, 10/31/07 14,650,000 10,657,875
------------
TELECOMMUNICATIONS -- 0.94%
GST Telecommunications, Inc. # $
13.875%, Sr. Discount Notes, 12/15/05 650,000 698,750
SA Telecommunications, Inc. # * @
10.00%, Notes, 8/15/06 8,500,000 1,700,000
SA Telecommunications, Inc. * @
10.00%, Notes, 8/15/06 5,000,000 1,000,000
WinStar Communications, Inc. # $
14.00%, Sr. Discount Notes, 10/15/05 3,500,000 4,672,500
------------
8,071,250
------------
TOTAL CONVERTIBLE BONDS
(cost $34,934,533) 28,671,343
------------
</TABLE>
38
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 0.61%
BROADCASTING -- 0.03%
Pegasus Communications Corp. @ 9,928 $ 250,682
------------
CABLE TELEVISION -- 0.12%
CS Wireless Systems, Inc. @ 3,300 3
EchoStar Communications Corp. @ 40,050 1,053,816
------------
1,053,819
------------
DIVERSIFIED FINANCIAL SERVICES -- 0.05%
Central Rents, Inc. @ # 7,150 432,575
------------
HEALTHCARE -- 0.14%
Intracel Corp. ++ 79,537 1,212,939
------------
PRINTING & PUBLISHING -- 0.03%
Affiliated Newspapers Investments, Inc. @ 2,500 301,250
------------
SERVICES -- 0.07%
Coinstar, Inc. @ 60,900 601,388
------------
TELECOMMUNICATIONS -- 0.10%
Jordan Telecommunications Products, Inc. 2,100 55,650
Nextel Communications, Inc. @ 27,112 777,775
Paging Do Brazil Holdings Co. LLC @ 1,000 0
------------
833,425
------------
TOYS -- 0.07%
Hedstrom Holdings, Inc. # @ 454,905 568,631
------------
TOTAL COMMON STOCKS
(cost $1,646,504) 5,254,709
CONVERTIBLE PREFERRED STOCKS -- 0.85%
BROADCASTING -- 0.42%
Unisite, 8.50% ++ 75,600 3,612,092
------------
HEALTHCARE -- 0.43%
Intracel Corp., 8.00% ++ 239,958 3,719,349
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $5,591,432) 7,331,441
------------
PREFERRED STOCKS -- 11.60%
BROADCASTING -- 4.65%
Capstar Broadcasting Partners, 12.00% & 121,787 14,340,419
Chancellor Media Corp., 12.00% & 67,058 8,415,779
Paxson Communications Corp., 12.50% & 112,570 11,594,710
SFX Broadcasting, Inc., 12.625% & 46,777 5,589,852
------------
39,940,760
------------
CABLE TELEVISION -- 0.38%
Echostar Communications Corp., 12.125% & 28,640 3,243,480
------------
CAPITAL GOODS MANUFACTURING -- 0.08%
Telos Corp., 12.00% 129,687 680,857
------------
CONSUMER PRODUCTS -- 1.35%
Commemorative Brands, Inc., 12.00% ++ 100,000 11,625,000
------------
FOOD/BEVERAGE/TOBACCO -- 1.87%
North Atlantic Trading, Inc., 12.00% & 607,648 16,102,672
------------
HEALTHCARE -- 0.53%
Intracel Corp., 10.00% ++ 45,482 4,570,941
------------
</TABLE>
39
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Security Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUPERMARKETS -- 1.53%
Jitney Jungle Stores America, Inc. 15.00% # ++ 40,000 $ 6,275,000
Supermarkets General Holdings Corp., $3.52 & 240,000 6,840,000
------------
13,115,000
------------
TELECOMMUNICATIONS -- 0.26%
Jordan Telecommunication Products, Inc., 13.25% & 21,000 2,226,000
------------
TEXTILE/APPAREL -- 0.95%
Anvil Holdings, Inc., 13.00% & 333,161 8,204,089
------------
TOTAL PREFERRED STOCKS
(cost $89,998,916) 99,708,799
------------
WARRANTS -- 3.45%
AIRLINES -- 0.00%
CHC Helicopter Corp., (expires 12/15/00) 2,000 6,000
------------
BANKS & THRIFTS -- 0.01%
Olympic Financial Ltd., (expires 3/15/07) 5,000 51,250
------------
BROADCASTING -- 0.22%
Benedek Communications Corp., (expires 7/01/07) 44,000 99,000
Spanish Broadcasting Systems, Inc., (expires 6/30/99) 5,000 1,750,000
------------
1,849,000
------------
CABLE TELEVISION -- 0.00%
American Telecasting, Inc., (expires 8/10/00) 4,000 0
Heartland Wireless Communications, Inc., (expires 4/15/00) 46,402 464
------------
464
------------
CAPITAL GOODS MANUFACTURING -- 0.01%
Roller Bearing Company America, Inc., (expires 6/15/09) 1,262 126,200
------------
COMPUTER/ELECTRONICS -- 0.06%
Electronic Retailing Systems International, Inc., (expires
2/01/04) 25,750 515,000
------------
CONSUMER PRODUCTS -- 0.26%
Chattem, Inc., (expires 6/17/99) 1,300 151,775
Commemorative Brands, Inc., (expires 1/31/08) ++ 19,820 198
Packaged Ice, Inc., (expires 4/15/04) 20,700 2,070,000
------------
2,221,973
------------
FOOD/BEVERAGE/TOBACCO -- 0.06%
Colorado Prime Corp., (expires 12/31/03) 7,000 0
North Atlantic Trading, Inc., (expires 6/15/07) 5,550 555,000
------------
555,000
------------
HEALTHCARE -- 0.04%
Intracel Corp., (expires 12/28/00) ++ 94,010 340,786
------------
LEISURE -- 1.93%
Source Media, Inc., (expires 3/31/04) 1,250,000 16,562,500
United States Interactive LLC, (expires 3/31/05) 3,833 38
------------
16,562,538
------------
OIL & GAS -- 0.01%
Forman Petroleum Corp., (expires 6/01/04) 5,000 50,000
------------
</TABLE>
40
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Shares/Principal
Security Amount Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER -- 0.05%
SD Warren Holdings Corp., (expires 12/15/06) 80,000 $ 420,000
------------
SERVICES -- 0.00%
ICF Kaiser International, Inc., (expires 12/31/98) 54,019 8,103
ICF Kaiser International, Inc., (expires 12/31/99) 24,500 245
Sabreliner Corp., (expires 4/15/03) 2,450 24,500
------------
32,848
------------
STEEL -- 0.05%
Bar Technologies, Inc., (expires 4/01/01) 7,000 402,500
Gulf States Steel, Inc., (expires 4/15/03) 5,010 13,778
Sheffield Steel Corp., (expires 11/01/01) 12,500 25,000
------------
441,278
------------
SUPERMARKETS -- 0.00%
Dairy Mart Convenience Stores, Inc., (expires
12/01/01) 23,632 17,724
------------
TELECOMMUNICATIONS -- 0.75%
Applied Voice Technology, Inc., (expires 1/03/02) 31,958 971,204
Cellnet Data Systems, Inc., (expires 10/01/07) 10,000 352,500
Cellular Communications International, Inc., (expires
8/15/03) 6,250 218,750
Clearnet Communications, Inc., (expires 9/15/05) 38,280 401,940
Colt Telecom Group PLC, (expires 12/31/06) 3,200 0
E Spire Communications Inc., (expires 11/01/05) 14,500 1,885,000
Geotek Communications, Inc., (expires 6/20/01) 177,000 0
Globalstar Telecommunications Ltd., (expires 2/15/04) 4,495 652,899
Hyperion Telecommunications, Inc., (expires 4/15/01) 10,200 714,000
Intelcom Group, Inc., (expires 9/15/05) 6,600 188,100
International Wireless Communications Holdings, Inc.
#,
(expires 8/15/01) 8,500 85
Iridium World Communications, Inc., (expires 7/25/05) 4,475 1,051,625
McCaw International Ltd., (expires 4/15/07) 9,500 49,875
Occidente Y Caribe Celular SA, (expires 3/15/04) 72,044 0
UNIFI Communications, Inc. #, (expires 2003) 12,295 0
Wireless One, Inc., (expires 10/19/00) 1,500 0
------------
6,485,978
------------
TOTAL WARRANTS
(cost $4,054,246) 29,676,039
------------
TOTAL INVESTMENT SECURITIES -- 96.81%
(cost $820,841,739) 832,550,989
REPURCHASE AGREEMENT -- 1.43%
Agreement with State Street Bank and Trust bearing
interest at 5.24% dated 4/30/98, to be repurchased
5/01/98 in the amount of $12,314,792 and collaterized
by $10,560,000 U.S. Treasury Bonds, 7.50% due
11/15/16, value $12,561,637
(cost $12,313,000) $12,313,000 12,313,000
OTHER ASSETS LESS LIABILITIES -- 1.76% 15,114,724
------------
NET ASSETS -- 100.00% $859,978,713
------------
------------
</TABLE>
41
<PAGE>
NORTHSTAR HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
APRIL 30, 1998
- --------------------------------------------------------------------------------
# Sales restricted to qualified institutional investors.
++ Private placement.
* Security in default.
& Payment-in kind security.
@@ Foreign security.
@ Non-income producing secuity.
$ Step bond.
1) A unit consists of $1,000 par value Sr. Notes, 7.50% due 12/15/07, and 1
warrant
2) A unit consists of $1,000 par value Notes, 13.00% due 12/15/04, and 0.4858
warrants and .0146 2nd series warrants.
3) A unit consists of $1,000 par value Sr. Discount Notes, 13.50% due 3/01/10,
and 10 warrants.
4) A unit consists of $1,000 par value Sr. Subordinated Notes, 16.00% due
6/30/03, and 1 warrant.
5) A unit consists of $1,000 par value Sr. Notes, 13.00% due 5/01/05, and 1
warrant.
6) A unit consists of $1,000 par value Sr. Secured Debentures, 15.00% due
12/01/09, and 8.45 warrants.
7) A unit consists of $1,000 par value Sr. Secured Notes, 12.00% due 2/01/03,
and 2.78311 warrants.
8) A unit consists of $1,000 par value Sr. Notes, 13.50% due 6/15/04, and 8
warrants.
9) A unit consists of $1,000 par value Sr. Notes, 11.25% due 4/15/08, and
0.483 preferred share
10) A unit consists of $1,000 par value Sr. Notes, 13.00% due 12/15/05, and
23.16 warrants.
11) The principal amount shown is shown in the respective country's currency.
12) A unit consists of $1,000 par value Sr. Discounted Notes, 14.00% due
6/01/04, and 1 warrant.
13) A unit consists of $1,000 par value Sr. Notes, 14.00% due 12/01/07, and 1
warrant.
42
<PAGE>
(This Page Left Blank Intentionally)
43
<PAGE>
NORTHSTAR TRUST
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1998
<TABLE>
<CAPTION>
Northstar Northstar Northstar Northstar Northstar Northstar
Growth + International Emerging Markets Income and High Total High Total
Value Fund Value Fund Value Fund Growth Fund Return Fund II Return Fund
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value
(cost $148,246,356, $323,585,315,
$4,745,399, $169,027,148,
$188,364,751 and $820,841,739,
respectively) $177,172,965 $358,828,801 $4,705,008 $195,506,512 $191,123,625 $832,550,989
Repurchase agreements 2,812,000 29,756,000 1,042,000 2,807,000 2,444,000 12,313,000
Cash 837 2,649,205 102,454 816 296,774 866
Foreign cash, at value (cost $0,
$0, $3,314, $0, $0 and $0,
respectively) 0 0 3,313 0 0 0
Receivable for investments sold 2,585,433 0 0 0 9,392,353 5,504,835
Receivable for shares of beneficial
interest sold 910,154 6,783,435 322,162 84,010 5,838,132 2,029,190
Dividends and interest receivable 52,116 2,072,059 20,737 1,351,752 3,557,679 17,072,778
Unrealized appreciation of foreign
currency contracts 0 0 472 0 0 0
Prepaid expenses 19,321 62,344 2,645 23,463 20,359 37,715
-----------------------------------------------------------------------------------------------
Total Assets 183,552,826 400,151,844 6,198,791 199,773,553 212,672,922 869,509,373
-----------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 93,441 0 244,575 0 1,137,208 4,705,813
Payable for shares of beneficial
interest reacquired 1,819,827 381,703 21,905 424,722 337,014 3,384,894
Investment advisory fee payable 148,815 309,086 3,777 123,792 122,057 488,719
Distribution fee payable 124,591 218,819 2,813 133,666 145,761 593,664
Administrative services fee payable 46,289 79,707 1,128 32,800 36,952 163,295
Transfer agent fee payable 2,979 18,664 537 28,719 10,038 116,992
Tax withholding liability 3,875 84,028 52 0 0 0
Unrealized depreciation of foreign
currency contracts 0 0 495 0 0 0
Income distribution payable 0 0 0 0 6,367 8,004
Accrued expenses 15,300 39,040 10,153 24,096 49,155 69,279
-----------------------------------------------------------------------------------------------
Total Liabilities 2,255,117 1,131,047 285,435 767,795 1,844,552 9,530,660
-----------------------------------------------------------------------------------------------
NET ASSETS $181,297,709 $399,020,797 $5,913,356 $199,005,758 $210,828,370 $859,978,713
===============================================================================================
NET ASSETS WERE COMPOSED OF:
Capital paid in for shares of
beneficial interest, $.01 par
value outstanding (unlimited
shares authorized) $162,553,281 $353,893,992 $5,932,077 $153,086,185 $207,623,389 $849,394,284
Undistributed (overdistributed) net
investment income (912,880) 441,718 21,793 490,884 (756,991) 2,122,892
Accumulated net realized gain
(loss) on investments (9,269,301) 9,455,795 128 18,949,325 1,202,713 (3,253,470)
Net unrealized appreciation
(depreciation) of investments and
foreign currency 28,926,609 35,229,292 (40,642) 26,479,364 2,759,259 11,715,007
-----------------------------------------------------------------------------------------------
Net Assets $181,297,709 $399,020,797 $5,913,356 $199,005,758 $210,828,370 $859,978,713
===============================================================================================
CLASS A:
Net Assets $ 41,020,266 $166,903,268 $2,163,899 $54,322,200 $ 31,347,593 $203,611,662
-----------------------------------------------------------------------------------------------
Shares outstanding 3,285,746 12,966,712 205,870 4,257,195 5,546,873 42,563,399
-----------------------------------------------------------------------------------------------
Net asset value and redemption
value per share (net assets/shares
outstanding) $12.48 $12.87 $10.51 $12.76 $5.65 $4.78
===============================================================================================
Maximum offering price per share
(net asset value plus sales charge
of 4.75% of offering price) $13.10 $13.51 $11.03 $13.40 $5.93 $5.02
===============================================================================================
CLASS B:
Net Assets $104,322,321 $118,420,457 $2,124,606 $72,091,288 $132,518,677 $564,013,607
-----------------------------------------------------------------------------------------------
Shares outstanding 8,437,773 9,264,561 202,558 5,664,303 23,428,942 118,006,367
-----------------------------------------------------------------------------------------------
Net asset value and offering price
per share $12.36 $12.78 $10.49 $12.73 $5.66 $4.78
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
CLASS C:
Net Assets $ 35,955,122 $113,697,072 $1,624,851 $72,592,270 $ 46,962,100 $ 92,353,444
-----------------------------------------------------------------------------------------------
Shares outstanding 2,909,456 8,901,475 155,189 5,712,558 8,293,882 19,239,928
-----------------------------------------------------------------------------------------------
Net asset value and offering price
per share $12.36 $12.77 $10.47 $12.71 $5.66 $4.80
===============================================================================================
</TABLE>
See accompanying notes to financial statements.
44
<PAGE>
NORTHSTAR TRUST
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
Northstar Northstar Northstar Northstar Northstar High Northstar
Growth + International Emerging Markets Income and Total Return High Total
Value Fund Value Fund Value Fund(1) Growth Fund Fund II Return Fund
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of withholding tax of
$3,875, $84,943, $52, $2,109, 0 and
$0, respectively) $ 530,847 $ 2,699,426 $ 28,605 $1,672,396 $ 311,621 $3,538,139
Interest 291,755 431,971 8,322 2,791,882 6,392,936 44,758,043
-------------------------------------------------------------------------------------------
Total investment income 822,602 3,131,397 36,927 4,464,278 6,704,557 48,296,182
-------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory and management fees 774,689 1,242,461 6,886 743,720 499,889 2,959,482
Distribution fees:
Class A 56,020 135,036 859 80,696 29,032 309,982
Class B 437,913 402,113 2,224 367,419 424,048 2,809,258
Class C 150,043 396,517 1,800 355,220 145,698 470,075
Transfer agent fees and expenses:
Class A 26,030 55,491 402 37,329 12,957 130,732
Class B 71,626 60,665 287 55,580 63,076 402,500
Class C 26,047 58,702 236 45,158 20,444 70,493
Administrative service fees 111,864 177,087 1,439 115,373 89,087 522,891
Custodian and fund accounting expenses 26,003 84,505 18,409 30,686 28,679 111,463
Registration fees 23,283 31,178 2,214 11,669 40,529 23,550
Audit expenses 12,537 13,605 10,160 13,297 14,292 12,803
Printing and postage expenses 11,996 20,163 11,617 13,958 11,353 38,733
Trustee expenses 4,592 5,575 3,350 4,456 4,942 4,313
Miscellaneous expenses 2,839 12,193 0 15,617 3,023 46,471
-------------------------------------------------------------------------------------------
1,735,482 2,695,291 59,883 1,890,178 1,387,049 7,912,746
Less expenses reimbursed by management
company 0 0 44,749 0 27,865 0
-------------------------------------------------------------------------------------------
Total expenses 1,735,482 2,695,291 15,134 1,890,178 1,359,184 7,912,746
-------------------------------------------------------------------------------------------
Net investment income (loss) (912,880) 436,106 21,793 2,574,100 5,345,373 40,383,436
-------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on investments (9,447,350) 10,623,253 0 18,949,266 1,202,713 (3,386,708)
Net realized (loss) gain on foreign
currency 0 (1,630,457) 128 0 0 224,007
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency 18,409,869 33,960,608 (40,642) (5,868,667 ) 2,724,209 (6,725,459 )
-------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 8,962,519 42,953,404 (40,514) 13,080,599 3,926,922 (9,888,160)
-------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 8,049,639 $43,389,510 $ (18,721) $15,654,699 $ 9,272,295 $30,495,276
===========================================================================================
</TABLE>
(1) Emerging Markets Value Fund commenced operations on January 1, 1998.
See accompanying notes to financial statements.
45
<PAGE>
NORTHSTAR TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Northstar
Northstar Northstar Emerging
Growth + Value International Value Markets Value
Fund Fund Fund
--------------------------------------- ----------------------------------- ------------------
<S> <C> <C> <C> <C> <C>
For the six For the period For the six For the year For the period
months ended November 18, 1996 to months ended ended January 1, 1998 to
April 30, 1998(1) October 31, 1997 April 30, 1998(1) October 31, 1997 April 30, 1998(1)
<CAPTION>
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income
(loss) $ (912,880) $ (801,952) $ 436,106 $ (40,240) $ 21,793
Net realized gain (loss)
on investments (9,447,350) 3,274,748 10,623,253 3,952,760 0
Net realized gain (loss)
on foreign currency 0 0 (1,630,457) (706,679) 128
Net change in unrealized
appreciation
(depreciation) of
investments and foreign
currency 18,409,869 10,516,740 33,960,608 669,652 (40,642)
------------------------------------------------------------------------------------------------
Increase (decrease) in
net assets resulting
from operations 8,049,639 12,989,536 43,389,510 3,875,493 (18,721)
FROM DIVIDENDS TO
SHAREHOLDERS:
Net investment income:
Class A 0 0 0 (262,842) 0
Class B 0 0 0 0 0
Class C 0 0 0 (74,358) 0
Net realized gain from
investments (2,294,747) 0 (1,549,040) (790,064) 0
------------------------------------------------------------------------------------------------
Total distributions (2,294,747) 0 (1,549,040) (1,127,264) 0
------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sale of
shares 53,806,487 133,578,481 226,320,816 177,693,876 6,054,179
Net asset value of shares
issued to shareholders
in reinvestment of
dividends 1,274,064 0 1,115,781 1,087,022 0
------------------------------------------------------------------------------------------------
55,080,551 133,578,481 227,436,597 178,780,898 6,054,179
Cost of shares redeemed (17,453,873) (8,651,878) (52,083,645) (31,008,648) (122,102)
------------------------------------------------------------------------------------------------
Net increase in net assets
derived from capital
share transactions 37,626,678 124,926,603 175,352,952 147,772,250 5,932,077
------------------------------------------------------------------------------------------------
Net increase in net assets 43,381,570 137,916,139 217,193,422 150,520,479 5,913,356
NET ASSETS:
Beginning of period 137,916,139 0 181,827,375 31,306,896 0
------------------------------------------------------------------------------------------------
End of period $181,297,709 $137,916,139 $399,020,797 $181,827,375 $5,913,356
================================================================================================
Undistributed
(overdistributed) net
investment income $ (912,880) $ 0 $ 441,718 $ 5,612 $ 21,793
================================================================================================
</TABLE>
(1) Unaudited
See accompanying notes to financial statements.
46
<PAGE>
NORTHSTAR TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Northstar Northstar
Northstar High Total Return High Total Return
Income and Growth Fund Fund II Fund
----------------------------------- ----------------------------------- -----------------
<S> <C> <C> <C> <C> <C>
For the period
For the six For the year For the six January 31, 1997 For the six
months ended ended months ended to months ended
April 30, 1998(1) October 31, 1997 April 30, 1998(1) October 31, 1997 April 30, 1998(1)
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 2,574,100 $ 4,860,869 $ 5,345,373 $ 486,767 $ 40,383,436
Net realized gain (loss)
on investments 18,949,266 8,423,068 1,202,713 342,601 (3,386,708)
Net realized gain on
foreign currency 0 0 0 0 224,007
Net change in unrealized
(depreciation)
appreciation of
investments and foreign
currency (5,868,667) 18,154,797 2,724,209 35,050 (6,725,459)
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase in net
assets resulting
from operations 15,654,699 31,438,734 9,272,295 864,418 30,495,276
FROM DIVIDENDS TO
SHAREHOLDERS:
Net investment income:
Class A (792,897) (1,758,881) (947,385) (127,869) (10,470,511)
Class B (813,800) (1,535,284) (3,833,160) (536,348) (26,561,311)
Class C (804,396) (1,387,594) (1,321,819) (165,151) (4,436,480)
Return of capital
Class A 0 0 0 (17,201) 0
Class B 0 0 0 (76,530) 0
Class C 0 0 0 (24,768) 0
Net realized gain from
investments (8,297,946) (22,088,154) 0 0 (27,484,835)
-------------------------------------------------------------------------------------------
Total distributions (10,709,039) (26,769,913) (6,102,364) (947,867) (68,953,137)
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sale
of shares 9,208,650 31,477,216 162,898,034 62,136,277 59,673,241
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends 8,925,227 19,661,408 1,863,258 249,885 25,566,052
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
18,133,877 51,138,624 164,761,292 62,386,162 85,239,293
Cost of shares redeemed (21,201,273) (75,510,753) (16,060,828) (3,344,738) (76,971,069)
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net increase (decrease)
in net assets derived
from capital share
transactions (3,067,396) (24,372,129) 148,700,464 59,041,424 8,268,224
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net increase (decrease)
in net assets 1,878,264 (19,703,308) 151,870,395 58,957,975 (30,189,637)
NET ASSETS:
Beginning of period 197,127,494 216,830,802 58,957,975 0 890,168,350
<CAPTION>
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
End of period $199,005,758 $197,127,494 $210,828,370 $58,957,975 $859,978,713
<CAPTION>
===========================================================================================
<S> <C> <C> <C> <C> <C>
Undistributed (overdis-
tributed) net
investment income $ 490,884 $ 327,877 $ (756,991) $ 0 $ 2,122,892
<CAPTION>
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
For the year
ended
October 31, 1997
<S> <C>
FROM OPERATIONS:
Net investment income $ 73,460,031
Net realized gain (loss)
on investments 27,484,100
Net realized gain on
foreign currency 39,530
Net change in unrealized
(depreciation)
appreciation of
investments and foreign
currency 9,355,358
<S> <C>
Increase in net
assets resulting
from operations 110,339,019
FROM DIVIDENDS TO
SHAREHOLDERS:
Net investment income:
Class A (19,197,944)
Class B (44,408,129)
Class C (7,446,587)
Return of capital
Class A 0
Class B 0
Class C 0
Net realized gain from
investments 0
Total distributions (71,052,660)
<S> <C>
FROM CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sale
of shares 371,371,162
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends 23,235,292
<S> <C>
394,606,454
Cost of shares redeemed (112,723,639)
<S> <C>
Net increase (decrease)
in net assets derived
from capital share
transactions 281,882,815
<S> <C>
Net increase (decrease)
in net assets 321,169,174
NET ASSETS:
Beginning of period 568,999,176
<S> <C>
End of period $ 890,168,350
<S> <C>
Undistributed (overdis-
tributed) net
investment income $ 3,207,758
</TABLE>
(1) Unaudited
See accompanying notes to financial statements.
47
<PAGE>
NORTHSTAR TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Net realized Dividends
Net Asset & unrealized declared Distributions
Value, Net gain (loss) Total from from net declared from Distributions
beginning investment on investment investment net realized declared from
Period ended of period income (loss) investment operations income gain capital
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Growth + Value Fund, Class A
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/18/97-
10/31/97 $ 10.00 ($ 0.05) $ 2.20 $ 2.15 $ 0.00 $ -- $ --
04/30/98 12.15 (0.04) 0.55 0.51 -- (0.18) --
<CAPTION>
Growth + Value Fund, Class B
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/18/97-
10/31/97 10.00 (0.08) 2.16 2.08 0.00 -- --
04/30/98 12.08 (0.07) 0.53 0.46 -- (0.18) --
<CAPTION>
Growth + Value Fund, Class C
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/18/96-
10/31/97 10.00 (0.08) 2.16 2.08 0.00 -- --
04/30/98 12.08 (0.07) 0.53 0.46 -- (0.18) --
<CAPTION>
International Value Fund, Class A
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/95-
10/31/95 7.64 0.09 0.37 0.46 0.00 -- --
10/31/96 8.10 0.14 0.85 0.99 (0.04) -- --
10/31/97 9.05 (0.09) 2.30 2.21 (0.14) (0.22)
04/30/98 10.90 0.02 2.04 2.06 -- (0.09) --
<CAPTION>
International Value Fund, Class B
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4/17/97-
10/31/97 10.00 (0.02) 0.89 0.87 0.00 -- --
04/30/98 10.87 0.01 1.99 2.00 -- (0.09) --
<CAPTION>
International Value Fund, Class C
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/95-
10/31/95 7.61 0.06 0.38 0.44 0.00 -- --
10/31/96 8.05 0.05 0.86 0.91 (0.03) -- --
10/31/97 8.93 (0.06) 2.20 2.14 (0.04) (0.17)
04/30/98 10.85 -- 2.00 2.00 2.00 (0.09) --
<CAPTION>
Emerging Markets Value Fund, Class A
------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/01/98-
04/30/98 10.00 0.05 0.46 0.51 -- -- --
<CAPTION>
Emerging Markets Value Fund, Class B
------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/01/98-
04/30/98 10.00 0.03 0.46 0.49 -- -- --
<CAPTION>
Emerging Markets Value Fund, Class C
------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/01/98-
04/30/98 10.00 0.03 0.44 0.47 -- -- --
<CAPTION>
Ratio of
Net Asset Assets, Ratio of expense income to
Value, end of expenses to reimbursement average Average
end of Total period average net to average net Portfolio commissions
Period ended period Return (000's) assets(1) net assets(1) assets(1) turnover per share
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/18/97
10/31/97 $ 12.15 21.50% $34,346 1.84% 0.02% (0.94%) 144% $0.0394
04/30/98 12.48 4.44 41,020 1.69 -- (0.62) 75 0.0395
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/18/97
10/31/97 12.08 20.80 76,608 2.55 0.02 (1.68) 144 0.0394
04/30/98 12.36 4.05 104,322 2.41 -- (1.35) 75 0.0395
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/18/96
10/31/97 12.08 20.80 26,962 2.56 0.02 (1.70) 144 0.0394
04/30/98 12.36 4.05 35,955 2.42 -- (1.36) 75 0.0395
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/95
10/31/95 8.10 6.98 5,188 1.85 6.08 1.67 0 --
10/31/96 9.05 6.09 16,777 1.85 0.97 1.52 74 0.0314
10/31/97 10.90 27.59 60,539 1.80 0.27 0.46 26 0.0218
04/30/98 12.87 19.02 166,903 1.71 -- 1.06 19 0.0021
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4/17/97
10/31/97 10.87 8.70 59,185 2.50 0.08 (0.71) 26 0.0218
04/30/98 12.78 18.62 118,420 2.43 -- (0.03) 19 0.0021
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/95
10/31/95 8.05 6.61 5,749 2.50 6.08 1.13 0 --
10/31/96 8.93 5.46 14,530 2.50 1.21 0.62 74 0.0314
10/31/97 10.86 25.92 62,103 2.50 0.24 (0.23) 26 0.0218
04/30/98 12.77 18.53 113,697 2.43 -- (0.06) 19 0.0021
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/01/98
04/30/98 10.51 5.10 2,164 1.77 5.76 3.29 0 0.0010
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/01/98
04/30/98 10.49 4.90 2,124 2.50 7.30 3.10 0 0.0010
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/01/98
04/30/98 10.47 4.70 1,625 2.50 6.62 3.04 0 0.0010
</TABLE>
48
<PAGE>
NORTHSTAR TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Net realized Dividends
Net Asset & unrealized declared Distributions
Value, Net gain (loss) Total from from net declared from Distributions
beginning investment on investment investment net realized declared from
Period ended of period income (loss) investment operations income gain capital
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Income and Growth Fund, Class A
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/08/93-
10/31/94 10.00 0.30 (0.05) 0.25 (0.25) -- --
10/31/95 10.00 0.35 0.84 1.19 (0.33) -- --
10/31/96 10.86 0.32 1.29 1.61 (0.31) -- --
10/31/97 12.16 0.38 1.53 1.91 (0.34) (1.26)
04/30/98 12.47 0.20 0.81 1.01 (0.19) (0.53) --
<CAPTION>
Income and Growth Fund, Class B
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2/09/94-
10/31/94 10.64 0.20 (0.65) (0.45) (0.20) -- --
10/31/95 9.99 0.27 0.85 1.12 (0.27) -- --
10/31/96 10.84 0.24 1.28 1.52 (0.23) -- --
10/31/97 12.13 0.27 1.55 1.82 (0.25) (1.26)
04/30/98 12.44 0.15 0.81 0.96 (0.14) (0.53) --
<CAPTION>
Income and Growth Fund, Class C
------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/21/94-
10/31/94 10.37 0.20 (0.38) (0.18) (0.20) -- --
10/31/95 9.99 0.27 0.85 1.12 (0.28) -- --
10/31/96 10.83 0.24 1.28 1.52 (0.23) -- --
10/31/97 12.12 0.28 1.54 1.82 (0.26) (1.26)
04/30/98 12.42 0.15 0.81 0.96 (0.14) (0.53) --
<CAPTION>
High Total Return Fund II, Class A
----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/31/97-
10/31/97 5.00 0.28 0.53 0.81 (.28) -- (.04)
04/30/98 5.49 0.23 0.18 0.41 (0.25) -- --
<CAPTION>
High Total Return Fund II, Class B
----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/31/97-
10/31/97 5.00 0.25 0.53 0.78 (.25) -- (.04)
04/30/98 5.49 0.21 0.19 0.40 (0.23) -- --
<CAPTION>
High Total Return Fund II, Class C
----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/31/97-
10/31/97 5.00 0.25 0.54 0.79 (.25) -- (.04)
04/30/98 5.50 0.21 0.18 0.39 (0.23) -- --
<CAPTION>
High Total Return Fund, Class A
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/08/93-
10/31/94 5.00 0.41 (0.60) (0.19) (0.40) -- --
10/31/95 4.41 0.48 0.07 0.55 (0.48) -- --
10/31/96 4.48 0.46 0.32 0.78 (0.48) -- --
10/31/97 4.78 0.48 0.20 0.68 (0.46) -- --
04/30/98 5.00 0.24 (0.06) 0.18 (0.25) (0.15) --
<CAPTION>
High Total Return Fund, Class B
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2/09/94-
10/31/94 5.20 0.33 (0.80) (0.47) (0.32) -- --
10/31/95 4.41 0.45 0.06 0.51 (0.45) -- --
10/31/96 4.47 0.43 0.32 0.75 (0.45) -- --
10/31/97 4.77 0.44 0.22 0.66 (0.43) -- --
04/30/98 5.00 0.22 (0.06) 0.15 (0.23) (0.15) --
<CAPTION>
High Total Return Fund, Class C
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/21/94-
10/31/94 5.06 0.26 (0.65) (0.39) (0.26) -- --
10/31/95 4.41 0.44 0.09 0.53 (0.45) -- --
10/31/96 4.49 0.43 0.32 0.75 (0.45) -- --
10/31/97 4.79 0.44 0.22 0.66 (0.43) -- --
04/30/98 5.02 0.22 (0.06) 0.16 (0.23) (0.15) --
<CAPTION>
Ratio of
Net Asset Assets, Ratio of expense income to
Value, end of expenses to reimbursement average Average
end of Total period average net to average net Portfolio commissions
Period ended period Return (000's) assets(1) net assets(1) assets(1) turnover per share
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/08/93
10/31/94 10.00 2.48 72,223 1.50 0.47 3.73 26 --
10/31/95 10.86 13.19 76,031 1.51 -- 3.39 91 --
10/31/96 12.16 14.48 85,250 1.52 -- 2.78 147 0.0600
10/31/97 12.47 17.02 53,805 1.47 -- 2.90 56 0.0600
04/30/98 12.76 8.38 54,322 1.40 -- 3.11 52 0.0588
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/09/94
10/31/94 9.99 (4.20) 37,767 2.20 0.16 3.00 26 --
10/31/95 10.84 12.31 60,347 2.23 -- 2.66 91 --
10/31/96 12.13 13.60 71,123 2.26 -- 2.04 147 0.0600
10/31/97 12.44 15.06 73,829 2.18 -- 2.18 56 0.0600
04/30/98 12.73 8.01 72,091 2.11 -- 2.39 52 0.0588
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/21/94
10/31/94 9.99 (1.75) 4,823 2.20 0.06 2.87 26 --
10/31/95 10.83 12.33 53,661 2.22 -- 2.67 91 --
10/31/96 12.12 13.68 60,458 2.20 -- 2.10 147 0.0600
10/31/97 12.42 15.04 69,494 2.15 -- 2.21 56 0.0600
04/30/98 12.71 8.05 72,592 2.09 -- 2.41 52 0.0588
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/31/97
10/31/97 5.49 16.53 8,548 1.26 3.36 5.89 164 --
04/30/98 5.65 7.88 31,346 1.43 0.04 8.62 98 --
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/31/97
10/31/97 5.49 15.91 38,076 1.95 0.75 5.20 164 --
04/30/98 5.66 7.48 132,519 2.14 0.04 7.92 98 --
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/31/97
10/31/97 5.50 16.12 12,334 1.95 0.78 5.17 164 --
04/30/98 5.66 7.49 46,962 2.14 0.04 7.92 98 --
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/08/93
10/31/94 4.41 (4.11) 50,797 1.50 0.99 10.09 163 --
10/31/95 4.48 13.02 88,552 1.55 -- 10.90 145 --
10/31/96 4.78 18.14 167,698 1.52 -- 9.86 158 --
10/31/97 5.00 15.03 215,361 1.42 -- 9.88 183 --
04/30/98 4.78 3.86 203,612 1.29 -- 9.91 78 --
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/09/94
10/31/94 4.41 (9.30) 25,880 2.20 0.20 9.72 163 --
10/31/95 4.47 11.97 96,362 2.25 -- 10.20 145 --
10/31/96 4.77 17.08 346,919 2.23 -- 9.14 158 --
10/31/97 5.00 14.46 577,351 2.12 -- 9.18 183 --
04/30/98 4.78 3.49 564,014 2.01 -- 9.19 78 --
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/21/94
10/31/94 4.41 (7.21) 2,330 2.20 0.11 9.46 163 --
10/31/95 4.49 12.44 11,011 2.27 -- 10.18 145 --
10/31/96 4.79 17.28 54,382 2.23 -- 9.14 158 --
10/31/97 5.02 14.42 97,457 2.13 -- 9.18 183 --
04/30/98 4.80 3.49 92,353 2.01 -- 9.19 78 --
</TABLE>
(1) Annualized
See accompanying notes to financial statements
49
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1998 (UNAUDITED)
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization -- The Northstar Trust, a business trust, was organized under
the laws of the Commonwealth of Massachusetts and registered under the
Investment Company Act of 1940 as a diversified open-end management investment
company. The names of each of the six investment series which comprise the Trust
(the "Funds") and their respective investment objectives are set forth below.
NORTHSTAR GROWTH + VALUE FUND, ("Growth + Value Fund") is a diversified
portfolio with the investment objective of capital appreciation by investing in
equity securities. The Fund seeks to achieve its objective through investments
in companies the portfolio manager identifies as either growth or value through
quantitative analysis.
NORTHSTAR INTERNATIONAL VALUE FUND, ("International Value Fund") is a
diversified portfolio with the investment objective of long-term capital
appreciation. The Fund invests primarily in foreign companies with a market
valuation of greater than $1 billion, but may hold up to 25% of its assets in
companies with smaller market capitalization. Portfolio managers apply the
technique of "value investing".
NORTHSTAR EMERGING MARKETS VALUE FUND, ("Emerging Markets Value Fund") is a
diversified portfolio with the investment objective of long-term capital
appreciation. The Fund invests primarily in foreign companies located in
countries with emerging markets. Portfolio managers apply the technique of
"value investing".
NORTHSTAR INCOME AND GROWTH FUND, ("Income and Growth Fund") is a
diversified portfolio with the investment objective of current income balanced
with capital appreciation. The Fund seeks to achieve its objective through
investments in a diversified group of securities selected for their prospects of
providing both current income and long-term growth of capital.
NORTHSTAR HIGH TOTAL RETURN FUND II, ("High Total Return Fund II") is a
diversified portfolio with the investment objective of high income and captial
appreciation. The Fund invests primarily in a diversified group of fixed income
securities which are selected for high current income and the potential for
capital growth, including lower-rated fixed income securities, convertible
securities, securities issued by U.S. companies in foreign currencies, and
securities issued by foreign governments and companies.
NORTHSTAR HIGH TOTAL RETURN FUND, ("High Total Return Fund") is a
diversified portfolio with the investment objective of high income and capital
appreciation. The Fund invests primarily in a diversified group of fixed income
securities which are selected for high current income and the potential for
capital growth, including lower-rated fixed income securities, convertible
securities, securities issued by U.S. companies in foreign currencies, and
securities issued by foreign governments and companies.
Security Valuation -- Equity securities are valued at the closing sale
prices reported on recognized securities exchanges or lacking any sales, at the
last available bid price. Prices of long-term debt securities are valued on the
basis of last reported sales price, or if no sales are reported, the value is
determined based upon the mean of representative quoted bid or asked prices for
such securities, or, if such prices are not available, at prices provided by
market makers, or at prices for securities of comparable maturity, quality and
type. Short-term debt instruments with remaining maturities of less than 60 days
are valued at amortized cost, unless the Trustees determine that amortized cost
does not reflect the fair value of such obligations. Securities for which market
quotations are not readily available are valued at fair value determined in good
faith by or under direction of the Trustees of the Trust. The books and records
of the Funds are maintained in U.S. dollars. Securities quoted in foreign
currencies are translated into U.S. dollars based on the prevailing exchange
rates on that day. The Adviser uses independent pricing services to price the
Funds' securities.
Management's Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date(s) of financial statements and the reported amounts of
income and expenses during the reporting period(s). Actual results could differ
from those estimates.
Security Transactions, Investment Income, Expenses -- Security transactions
are recorded on the trade date. Realized gains or losses on sales of investments
are calculated on the identified cost basis. Interest
50
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1998 (UNAUDITED)
income is recorded on the accrual basis except when collection is not expected;
discounts are accrued, and premiums amortized to par at maturity; dividend
income is recorded on the ex-dividend dates. Income, expenses (except class
specific expenses), and realized/unrealized gains/losses, are allocated
proportionately to each Fund or class of shares based upon the relative net
asset value.
Distributions to Shareholders -- Dividends from net investment income are
declared and paid monthly by the High Total Return Fund II and High Total Return
Fund, and declared and paid quarterly by the Income and Growth Fund, and
declared and paid annually by the Growth + Value Fund, International Value Fund,
and Emerging Markets Value Fund. Distributions of net realized capital gains, if
any, are declared annually; however, to the extent that a net realized capital
gain can be reduced by a capital loss carryover, such gain will not be
distributed.
The Funds may periodically make reclassifications among certain of their
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulation which may differ from generally accepted accounting
principles.
Foreign Currency -- The Funds isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held.
Net realized and unrealized gain(loss) on foreign currency transactions
represents the foreign exchange: (1) gains and losses from the sale of holdings
of foreign currencies, (2) gains and losses between trade date and settlement
date on investment securities transactions and forward exchange contracts, and
(3) gains and losses from the difference between amounts of interest and
dividends recorded and the amounts actually received.
Forward Foreign Currency Contracts and Options and Futures -- The Funds may
enter into forward foreign currency contracts ("contracts") to purchase or sell
currencies at a specified rate at a future date. The Funds may enter into these
contracts solely for hedging purposes.
The Funds write and purchase put and call options on foreign currencies. The
premium paid by the Funds for the purchase of a call or put option is recorded
as an investment and subsequently "marked-to-market" to reflect the current
market value of the option. If an option which the Funds have purchased expires
on the stipulated expiration date, the Funds realize a loss in the amount of the
cost of the option.
The amount of potential gain or loss to the Funds upon exercise of a written
call option is the value (in U.S. dollars) of the currency sold, less the value
of the U.S. dollars received in exchange. The amount of potential gain or loss
to the Funds upon exercise of a written put option is the value (in U.S.
dollars) of the currency received, less the value of the U.S. dollars paid in
exchange.
Risks may arise upon entering these contracts from the potential inability
of counterparties to meet the terms of their contract and from unanticipated
movement in the value of a foreign currency relative to the U.S. dollar.
Initial margin deposits made upon entering into futures contracts are
recognized as assets due from the broker (the Fund's agent in acquiring the
futures position). During the period the futures contract is open, changes in
the value of the contract are recognized as unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the contract
at the end of each day's trading.
Variation margin payments are received or made, depending upon whether
unrealized gains or losses are incurred. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transaction and the Fund's basis in the contract.
Repurchase Agreements -- The Funds' Custodian takes possession of collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to assure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Funds have the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
51
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1998 (UNAUDITED)
Federal Income Taxes -- The Trust intends to comply with the special
provisions of the Internal Revenue Code available to investment companies and to
distribute all of the taxable net income to their respective shareholders.
Therefore, no Federal income tax provision or excise tax provision is required.
Organization Costs -- Costs incurred by the Trust in connection with its
organization of each Fund have been deferred and are being amortized over a
period of five years from the date the Funds commenced operations. Each Fund
offers three classes of shares.
NOTE 2. INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
Northstar Holding, Inc. (and its wholly-owned operating subsidiaries,
Northstar Investment Management Corp., Northstar Distributors, Inc. and
Northstar Administrator Corp.) is an indirect wholly-owned subsidiary of
Reliastar Financial Corp. Northstar Investment Management Corp. (the "Adviser")
serves as each Fund's investment adviser. The Growth + Value Fund, International
Value Fund, and Emerging Markets Value Fund pay the Adviser an investment
advisory fee calculated at an annual rate of 1.00% of average daily net assets.
The Income and Growth Fund and High Total Return Fund pay the Adviser an
investment advisory fee calculated at an annual rate of 0.75% on the first
$250,000,000 of aggregate average daily net assets, 0.70% on the next
$250,000,000 of such assets, 0.65% on the next $250,000,000 of such assets,
0.60% on the next $250,000,000 of such assets, and 0.55% on the assets of each
Fund in excess of $1 billion. The High Total Return Fund II pays the Adviser an
investment advisory fee calculated at an annual rate of 0.75% of average daily
net assets. For the period ended April 30, 1998, the Adviser earned $6,227,127
in investment advisory fees. Navellier Fund Management, Inc. ("Navellier"), a
registered investment adviser, serves as subadviser to the Growth + Value Fund
pursuant to a Subadvisory Agreement dated July 31, 1996, between the Adviser and
Navellier. For its services, Navellier receives from the Adviser, an annual fee
equal to 0.64% of the average daily net assets of the Fund. For the period ended
April 30, 1998, Navellier received $495,768 in subadvisory fees from the
Adviser. Brandes Investment Partners, L.P. ("Brandes"), a registered investment
adviser, serves as subadviser to the International Value Fund and Emerging
Markets Value Fund pursuant to Subadvisory Agreements dated February 28, 1997
and November 8, 1997, respectively, between the Adviser and Brandes. For its
services, Brandes receives from the Adviser an annual fee equal to 50% of the
management fee that each of the funds it subadvises pays the Adviser (currently
0.50% of the average daily net assets of each Fund). For the period ended April
30, 1998, Brandes received $621,230 and $1,889 in subadvisory fees from the
Adviser for the International Value Fund and Emerging Markets Value Fund,
respectively. Wilson/Bennett Capital Management, Inc. ("Wilson/Bennett"), a
registered investment adviser, served as subadviser with respect to the common
stock portion of the Income and Growth Fund pursuant to a Subadvisory Agreement
dated July 31, 1996 and terminated December 31, 1997 between the Adviser and
Wilson/Bennett. For its services, Wilson/Bennett received from the Adviser an
annual fee equal to 0.20% of the first $125 million of the average daily net
assets it managed, 0.25% of the next $125 million, and 0.30% for assets in
excess of $250 million. For the period ended April 30, 1998, Wilson/Bennett
received $39,209 in subadvisory fees from the Adviser. The Adviser has
voluntarily undertaken to limit the expenses of the High Total Return Fund II to
1.26% (Class A) and 1.96% (Class B&C) until December 31, 1997 and the Emerging
Markets Value Fund to 1.80% (Class A) and 2.50% (Class B&C) of each respective
class's average net assets. The Adviser will reimburse the funds for amounts in
excess of such limits, up to the total amount of fees received during the
period. As of April 30, 1998, the Adviser's reimbursements totaled $27,865 and
$44,749 for the High Total Return II Fund and Emerging Markets Value Fund,
respectively. Northstar Administrators Corp. (the "Administrator"), an affiliate
of the Adviser, serves as each Fund's administrator. The Funds pay the
Administrator a fee calculated at an annual rate of 0.10% of each Fund's average
daily net assets, and an annual shareholder account servicing fee of $5.00,
payable semi-annually, for each account of beneficial owners of shares. For the
period ended April 30, 1998, the Administrator earned $1,017,741 in
administrative and account servicing fees. Northstar Distributors, Inc. (the
"Distributor"), an affiliate of the Adviser and the Administrator, is the
distributor of each Fund's shares. Under separate Distribution Plans pertaining
to Class A, B, and C shares, the Trust pays the Distributor monthly service fees
at an annual rate of 0.25% of the average daily net assets in Class A, B and C
shares and monthly distribution fees at the annual rate of 0.05% of the average
daily net assets of Class A shares and 0.75% of the average daily net assets of
Class B and C shares. As of April 30, 1998, the Trust owed the Distributor
$1,219,314 in service and distribution fees. The Distributor also receives the
proceeds of
52
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1998 (UNAUDITED)
initial sales charges paid by shareholders upon the purchase of Class A shares
and contingent deferred sales charges paid by shareholders upon certain
redemptions of Class A, B and C shares. For the period ended April 30, 1998, the
Distributor earned the following amounts in sales charges:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
-------- ---------- -------
<S> <C> <C> <C>
Initial sales charges $311,685 N/A N/A
Contingent deferred
sales charges $ 25,885 $1,394,815 $96,857
</TABLE>
NOTE 3. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
(excluding short-term investments) for the period ended April 30, 1998, were as
follows:
<TABLE>
<CAPTION>
GROWTH + INTERNATIONAL EMERGING MARKETS INCOME & HIGH TOTAL HIGH TOTAL
VALUE FUND VALUE FUND VALUE FUND GROWTH FUND RETURN FUND II RETURN FUND
------------ ------------- ---------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate purchases $150,349,715 $188,670,135 $4,745,399 $100,471,646 $260,826,983 $658,368,378
Aggregate sales $110,703,619 $ 45,526,419 $ 0 $109,856,216 $112,752,985 $646,925,234
</TABLE>
U.S. Government Securities included above were as follows:
<TABLE>
<CAPTION>
GROWTH + INTERNATIONAL EMERGING MARKETS INCOME & HIGH TOTAL HIGH TOTAL
VALUE FUND VALUE FUND VALUE FUND GROWTH FUND RETURN FUND II RETURN FUND
---------- ------------- ---------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Aggregate purchases $0 $ 0 $0 $3,600,000 $0 $ 0
Aggregate sales $0 $ 0 $0 $24,417,622 $0 $ 0
</TABLE>
NOTE 4. PORTFOLIO SECURITIES (TAX BASIS)
The cost of securities for federal income tax purposes and the aggregate
appreciation and depreciation of securities at April 30, 1998 were as follows:
<TABLE>
<CAPTION>
GROWTH + INTERNATIONAL EMERGING MARKETS INCOME & HIGH TOTAL HIGH TOTAL
VALUE FUND VALUE FUND VALUE FUND GROWTH FUND RETURN FUND II RETURN FUND
------------ ------------- ---------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Cost (tax basis) $148,246,356 $323,585,315 $4,745,399 $169,027,148 $188,364,751 $820,841,739
Appreciated
securities 32,657,935 51,377,695 168,944 27,897,703 4,596,426 72,055,974
Depreciated
securities 3,731,326 16,134,208 209,336 1,418,339 1,837,551 60,346,724
Net unrealized
appreciation/
depreciation $ 28,926,609 $ 35,243,487 ($ 40,392) $26,479,364 $ 2,758,875 $11,709,250
</TABLE>
NOTE 5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each Fund for the period ended April 30,
1998, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR GROWTH & VALUE FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,107,949 $ 13,046,192 2,484,713 $ 29,082,909 1,002,508 $ 11,677,386
Reinvested dividends 35,555 384,793 62,401 668,313 20,745 220,958
Shares redeemed (684,659) (8,173,902) (451,478) (5,294,270) (346,350) (3,985,701)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 458,845 $ 5,257,083 2,095,636 $ 24,456,952 676,903 $ 7,912,643
---------- ------------ ------------ ------------ ----------- ------------
</TABLE>
53
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NORTHSTAR INTERNATIONAL VALUE FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 9,874,326 $118,845,933 4,097,500 $ 49,155,168 4,877,365 $ 58,319,715
Reinvested dividends 36,151 393,327 31,615 342,752 35,060 379,702
Shares redeemed (2,497,128) (28,202,854) (311,753) (3,627,432) (1,730,604) (20,253,359)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 7,413,349 $ 91,036,406 3,817,362 $ 45,870,488 3,181,821 $ 38,446,058
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR EMERGING MARKETS VALUE FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 214,529 $ 2,252,120 204,636 $ 2,162,997 155,847 $ 1,639,062
Reinvested dividends 0 0 0 0 0 0
Shares redeemed (8,659) (92,904) (2,078) (22,178) (658) (7,020)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 205,870 $ 2,159,216 202,558 $ 2,140,819 155,189 $ 1,632,042
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR INCOME & GROWTH FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 398,507 $ 4,998,095 221,627 $ 2,749,441 116,558 $ 1,461,114
Reinvested dividends 224,017 2,723,048 207,079 2,509,694 305,066 3,692,485
Shares redeemed (681,001) (8,550,707) (701,327) (8,820,583) (304,963) (3,829,983)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease (58,477) ($ 829,564) (272,621) ($ 3,561,448) 116,661 $ 1,323,616
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR HIGH TOTAL RETURN FUND II
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 5,343,029 $ 29,855,259 16,856,764 $ 94,442,480 6,876,494 $ 38,600,295
Reinvested dividends 65,930 369,768 171,417 962,426 94,445 531,064
Shares redeemed (1,420,535) (7,870,736) (533,072) (2,992,799) (921,076) (5,197,293)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 3,988,424 $ 22,354,291 16,495,109 $ 92,412,107 6,049,863 $ 33,934,066
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR HIGH TOTAL RETURN FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,363,192 $ 16,216,203 7,333,575 $ 35,260,569 1,696,167 $ 8,196,469
Reinvested dividends 1,840,180 8,729,877 3,045,860 14,441,357 503,769 2,394,818
Shares redeemed (5,695,408) (27,452,308) (7,898,415) (38,037,740) (2,378,156) (11,481,021)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease (492,036) $ (2,506,228) 2,481,020 $ 11,664,186 (178,220) $ (889,734)
---------- ------------ ------------ ------------ ----------- ------------
</TABLE>
54
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1998 (UNAUDITED)
Transactions in capital shares of each class of shares of each Fund for the
period ended October 31, 1997, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR GROWTH & VALUE FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,198,589 $ 35,128,129 6,594,961 $ 72,326,051 2,376,801 $ 26,124,301
Reinvested dividends 0 0 0 0 0 0
Shares redeemed (371,688) (4,227,202) (252,824) (2,794,803) (144,248) (1,629,873)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 2,826,901 $ 30,900,927 6,342,137 $ 69,531,248 2,232,553 $ 24,494,428
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR INTERNATIONAL VALUE FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 4,935,067 $ 54,623,151 5,542,720 $ 62,354,855 5,488,633 $ 60,716,040
Reinvested dividends 65,938 647,027 0 0 44,366 439,995
Shares redeemed (1,302,050) (14,082,310) (95,521) (1,073,954) (1,439,291) (15,852,384)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 3,698,955 $ 41,187,868 5,447,199 $ 61,280,901 4,093,708 $ 45,303,651
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR INCOME & GROWTH FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,243,862 $ 14,890,910 841,7601 $ 10,066,857 532,573 $ 6,519,449
Reinvested dividends 562,660 6,530,795 482,072 5,581,663 652,245 7,548,949
Shares redeemed (4,502,701) (53,333,104) (1,249,464) (15,194,869) ( 577,643) ( 6,982,779)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease (2,696,179) ($31,911,399) 74,369 $ 453,651 607,175 $ 7,085,619
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR HIGH TOTAL RETURN FUND II
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,030,839 $ 11,223,031 7,001,479 $ 38,488,121 2,255,476 $ 12,425,126
Reinvested dividends 11,470 62,725 26,673 146,533 7,387 40,627
Shares redeemed (483,860) (2,718,468) (94,319) (522,919) (18,844) (103,352)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 1,558,449 $ 8,567,288 6,933,833 $ 38,111,735 2,244,019 $ 12,362,401
---------- ------------ ------------ ------------ ----------- ------------
<CAPTION>
NORTHSTAR HIGH TOTAL RETURN FUND
-----------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 15,013,653 $ 72,250,956 50,969,211 $244,941,244 11,157,080 $ 54,178,962
Reinvested dividends 1,761,535 8,526,615 2,606,832 12,616,157 431,760 2,092,519
Shares redeemed (8,829,614) (42,947,742) (10,740,737) (52,447,214) (3,517,940) (17,328,682)
---------- ------------ ------------ ------------ ----------- ------------
Net increase/decrease 7,945,574 $ 37,829,829 42,835,306 $205,110,187 8,070,900 $ 38,942,799
---------- ------------ ------------ ------------ ----------- ------------
</TABLE>
NOTE 6. CREDIT RISK AND DEFAULTED SECURITIES
Although the Funds have a diversified portfolio, the High Total Return Fund
II and High Total Return Fund had 84.57% and 80.30%, respectively, of their
portfolios invested in lower rated and comparable quality unrated high yield
securities. Investments in higher yield securities are accompanied by a greater
degree of credit risk
55
<PAGE>
NORTHSTAR TRUST
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1998 (UNAUDITED)
and such lower rated securities tend to be more sensitive to economic conditions
than higher rated securities. The risk of loss due to default by the issuer may
be significantly greater for the holders of high yielding securities, because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. At April 30, 1998, the High Total Return Fund held SA
Telecom and Heartland Wireless, defaulted securities. The aggregate value for
these securities are $8,859,000. At April 30, 1998, the High Total Return Fund
II held Heartland Wireless, defaulted security. The aggregate value of this
security is $1,220.
For financial reporting purposes, it is each Fund's accounting practice to
discontinue accrual of income and provide an estimate for probable losses due to
unpaid interest income on defaulted bonds for the current reporting period.
NOTE 7. SECURITY LOANS
Each Fund may lend its securities to brokers, dealers and other financial
institutions in amounts up to one third of the value of its total assets. The
loans are fully collateralized at all times by cash or liquid high grade
securities. As with other extensions of credit, each Fund may bear risk of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. The Funds receive compensation for lending its
securities in the form of fees or all or a portion of the income from
investments of the collateral. The Funds also continue to earn income on the
securities loaned. At April 30, 1998, the Funds did not have any securities on
loan.
NOTE 8. ACQUISITION
At the close of business on April 17, 1997 (the "Closing"), the Northstar
International Value Fund ("International Value Fund") acquired the net assets of
the Brandes International Fund, pursuant to an Agreement of Reorganization dated
February 4, 1997. In accordance with the agreement, the International Value
Fund, at the closing, issued 4,152,725 shares of the International Value Fund
having an aggregate value of $41,547,387 which included unrealized appreciation
on investments of $4,299,350. As a result, the International Value Fund issued
1.637 shares for each Brandes International Fund Class A and 1.643 shares for
each Brandes International Fund Class C share. The transaction was structured
for tax purposes to qualify as a tax-free reorganization under the Internal
Revenue Code. Directly after the merger the combined net assets in the
International Value Fund were $41,547,387 with a net asset value of $10.00 for
Class A and C shares.
56
<PAGE>
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NORTHSTAR
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