<PAGE>
NORTHSTAR/NWNL
VARIABLE ACCOUNT
NORTHSTAR FUNDS
SEMI-ANNUAL REPORT
FOR THE PERIOD ENDED
JUNE 30, 1995
(UNAUDITED)
[Logo]
This report has been prepared to provide information to owners of Northstar/NWNL
Variable Account Contracts. If it is used for any other purpose, it must be
accompanied or preceded by a current Northstar/NWNL Variable Account Prospectus
which discloses any charges and other important information about the Account,
together with the current Prospectuses for the underlying Funds.
<PAGE>
[LOGO]
NORTHSTAR/NWNL VARIABLE ACCOUNT
NORTHSTAR FUNDS
SEMI-ANNUAL REPORT
FOR THE PERIOD ENDED
JUNE 30, 1995
(UNAUDITED)
TABLE OF CONTENTS PAGE
Northstar/NWNL Variable Account
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . i
Northstar Growth Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Northstar Growth Fund Portfolio of Investments. . . . . . . . . . . 2
Northstar Income and Growth Fund . . . . . . . . . . . . . . . . . . . . . 5
Northstar Income and Growth Fund Portfolio of Investments . . . . . 6
Northstar Multi-Sector Bond Fund . . . . . . . . . . . . . . . . . . . . . 10
Northstar Multi-Sector Bond Fund Portfolio of Investments . . . . . 11
Northstar High Yield Bond Fund . . . . . . . . . . . . . . . . . . . . . . 14
Northstar High Yield Bond Fund Portfolio of Investments . . . . . . 15
Northstar/NWNL Trust Financial Statements. . . . . . . . . . . . . . . . . 20
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
June 30,1995
(In Thousands, Except Share and Unit Data)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS: NORTHSTAR'S NORTHSTAR'S NORTHSTAR'S
------- INCOME AND NORTHSTAR'S MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND BOND FUND BOND FUND
Investments in mutual funds at market value: ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
NORTHSTAR'S:
Income and Growth Fund
195,080 shares (cost $1,996) $2,126
Growth Fund
10,631 shares (cost $112) $122
Multi-Sector Bond Fund
64,840 shares (cost $323) $332
High Yield Bond Fund
237,020 shares (cost $1,160) $1,166
FIDELITY'S VIPF AND VIPF II:
Money Market Portfolio
0 shares (cost $-)
Overseas Portfolio
0 shares (cost $-)
Asset Manager Portfolio
0 shares (cost $-)
Index 500 Portfolio
0 shares (cost $-)
----------- ----------- ------------ -----------
Total Assets $2,126 $122 $332 $1,166
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
LIABILITIES AND CONTRACT
OWNER'S EQUITY:
Due to (from) Northwestern National Life
Insurance Company for contract charges $ 2 $ - $ - $ (1)
Contract Owners' Equity 2,124 122 332 1,167
----------- ----------- ------------ -----------
Total Liabilities and Contract Owners' Equity $2,126 $122 $332 $1,166
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
Units Outstanding: 189,565.382 10,365.634 30,302.817 108,535.284
Net Asset Value per Unit
Northstar/NWNL Variable Annuity
Tax Qualified $11.205853 $11.750343 $10.969844 $10.752793
Non-Tax Qualified $11.205853 $11.750343 $10.969844 $10.752793
</TABLE>
The accompanying notes are an integral part of the financial statements.
i
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
FIDELITY'S FIDELITY'S FIDELITY'S FIDELITY'S
VIPF VIPF VIPF II VIPF II
MONEY MARKET OVERSEAS ASSET MANAGER INDEX 500
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
Investments in mutual funds at market value: ------------ ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
NORTHSTAR'S:
Income and Growth Fund
195,080 shares (cost $1,996) $2,126
Growth Fund
10,631 shares (cost $112) 122
Multi-Sector Bond Fund
64,840 shares (cost $323) 332
High Yield Bond Fund
237,020 shares (cost $1,160) 1,166
FIDELITY'S VIPF AND VIPF II:
Money Market Portfolio
0 shares (cost $-) $- -
Overseas Portfolio
0 shares (cost $-) $- -
Asset Manager Portfolio
0 shares (cost $-) $- -
Index 500 Portfolio
0 shares (cost $-) $- -
------------ ---------- ------------- ---------- ------------
Total Assets $- $- $- $- $3,746
------------ ---------- ------------- ---------- ------------
------------ ---------- ------------- ---------- ------------
LIABILITIES AND CONTRACT
OWNER'S EQUITY:
Due to (from) Northwestern National Life
Insurance Company for contract charges $- $- $- $- $1
Contract Owners' Equity - - - - 3,745
------------ ---------- ------------- ---------- ------------
Total Liabilities and Contract Owners' Equity $- $- $- $- $3,746
------------ ---------- ------------- ---------- ------------
------------ ---------- ------------- ---------- ------------
Units Outstanding: - - - - 338,769.117
Net Asset Value per Unit
Northstar/NWNL Variable Annuity
Tax Qualified $10.073701 $10.184778 $10.183263 $10.615014
Non-Tax Qualified $10.073701 $10.184778 $10.183263 $10.615014
</TABLE>
The accompanying notes are an integral part of the financial statements.
ii
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
STATEMENT OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY
(In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Six months Period from
ended May 6, 1994 to
June 30, 1995 Dec. 31, 1994
------------- --------------
<S> <C> <C>
Net investment income:
Reinvested dividend income. . . . . . . . $ 70 $ 16
Reinvested capital gains. . . . . . . . . - 9
Administrative expenses . . . . . . . . . (19) (3)
--------- ---------
Net investment income
and capital gains . . . . . . . . . 51 22
--------- ---------
Realized and unrealized gains (losses):. . . .
Net realized gains (losses) on. . . . . .
redemptions of fund shares. . . . . 16 (1)
Increase (decrease) in unrealized
appreciation of investments . . . . 180 (25)
--------- ---------
Net realized and unrealized gains
(losses). . . . . . . . . . . . . . 196 (26)
--------- ---------
Additions (reductions)
from operations . . . . . . . 247 (4)
--------- ---------
Contract Owners' transactions:
Net purchase payments . . . . . . . . . . 2,219 1,381
Surrenders. . . . . . . . . . . . . . . . (76) (22)
Transfers between Sub-Accounts
and Fixed Account. . . . . . . . . . . - -
--------- ---------
Additions for Contract
Owners' transactions . . . . . . . 2,143 1,359
--------- ---------
Net additions for the period . 2,390 1,355
Contract Owners' Equity, beginning
of the year. . . . . . . . . . 1,355 -
--------- ---------
Contract Owners' Equity, end
of the period. . . . . . . . . $3,745 $1,355
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
iii
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND CONTRACTS:
Northstar/NWNL Variable Account (the Account) is a separate account of
Northwestern National Life Insurance Company (NWNL or Northwestern), a
wholly-owned subsidiary of The ReliaStar Financial Corp. (formerly The NWNL
Companies, Inc.). The Account commenced operations on May 6, 1994 and is
registered as a unit investment trust under the Investment Company Act of
1940.
Purchase payments received under the contracts are allocated to
Sub-Accounts of the Account, each of which is invested in one of the Funds
listed below during the period.
Northstar/NWNL Trust's Funds: Fidelity's VIPF and VIPF II:
----------------------------- ----------------------------
Income and Growth Fund Money Market Portfolio
Growth Fund Overseas Portfolio
Multi-Sector Bond Fund Asset Manager Portfolio
High Yield Bond Fund Index 500 Portfolio
Northstar Investment Management Corporation, an affiliate of NWNL, is the
investment adviser for the four Funds of the Northstar/NWNL Trust and is
paid fees for its services by the Funds. Fidelity Management & Research
Company is the investment advisor for Fidelity's VIPF and VIPF II and is
paid for its services by the VIPF and VIPF II Portfolios. On May 2, 1995,
Sub-Accounts investing in the VIPF and VIPF II Portfolios were made
available under the contracts.
SECURITIES VALUATION TRANSACTIONS AND RELATED INVESTMENT INCOME:
The market value of investments in the Sub-Accounts is based on the closing
net asset values of the Fund shares held at the end of the period.
Investment transactions are accounted for on the trade date (date the order
to purchase or redeem is executed) and dividend income and capital gain
distributions are recorded on the ex-dividend date. Net realized gains and
losses on redemptions of shares of the Funds are determined on the basis of
specific identification of Fund share costs.
VARIABLE ANNUITY RESERVES:
The amount of the reserves for contracts in the distribution period is
determined by actuarial assumptions which meet statutory requirements.
Gains or losses resulting from actual mortality experience, the full
responsibility for which is assumed by NWNL, are offset by transfers to (or
from) NWNL.
2. FEDERAL INCOME TAXES:
Under current tax law, the income, gains and losses from the separate
account investments are not taxable to either the Account or NWNL.
3. CONTRACT CHARGES:
No deduction is made for a sales charge from the purchase payments made for
the contracts. However, on certain surrenders, NWNL will deduct from the
contract value a surrender charge as set forth in the contract.
Certain charges are made by NWNL to Contract Owners' Variable Accumulation
Values in the Account in accordance with the terms of the Contracts. These
charges may include: an annual administrative/contract charge of $35 from
each contract on the anniversary date or at the time of surrender, if
surrender is at a time other than the anniversary date; a daily
administrative charge; and a daily charge for mortality and expense risk
assumed by NWNL. NWNL bears the risk of adverse mortality experience and
any costs for sales and administrative services and expenses which exceed
these periodic charges.
Various states and other governmental units levy a premium tax on annuity
contracts issued by insurance companies. If the owner of a contract lives
in a state which levies such a tax, NWNL may deduct the amount of the tax
from the purchase payments received or the value of the contract at
annuitization.
iv
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
4. INVESTMENTS:
The net realized gains (losses) on redemptions of fund shares for the six
months ended June 30, 1995 and the period from May 6, 1994 (date operations
commenced) to December 31, 1994, were as follows, (in thousands):
<TABLE>
<CAPTION>
NORTHSTAR'S
INCOME AND NORTHSTAR'S
TOTAL GROWTH FUND GROWTH FUND
------------------------------- ------------------------------- -------------------------------
Six months Period from Six months Period from Six months Period from
ended May 6, 1994 ended May 6, 1994 ended May 6, 1994
June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994
------------- ---------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from redemptions. . . . $1,084 $65 $786 $24 $13 $14
Cost . . . . . . . . . . . . . . 1,068 66 775 25 12 14
------ --- ---- --- --- ---
Net realized gains (losses) on
redemptions of fund shares . . $ 16 ($1) $ 11 ($1) $ 1 $ -
------ --- ---- --- --- ---
------ --- ---- --- --- ---
<CAPTION>
FIDELITY'S VIPF FIDELITY'S VIPF II FIDELITY'S VIPF II
OVERSEAS ASSET MANAGER INDEX 500
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------- ------------------------------- -------------------------------
Six months Period from Six months Period from Six months Period from
ended May 6, 1994, ended May 6, 1994 ended May 6, 1994
June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994
------------- ---------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from redemptions. . . . $ - $ - $ - $ - $ - $ -
Cost . . . . . . . . . . . . . . - - - - - -
------ --- ---- --- --- ---
Net realized gains (losses) on
redemptions of fund shares . . $ - $ - $ - $ - $ - $ -
------ --- ---- --- --- ---
------ --- ---- --- --- ---
</TABLE>
v
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
NORTHSTAR'S NORTHSTAR'S FIDELITY'S VIPF
MULTI-SECTOR HIGH YIELD MONEY MARKET
BOND FUND BOND FUND PORTFOLIO
------------------------------- ------------------------------- -------------------------------
Six months Period from Six months Period from Six months Period from
ended May 6, 1994 ended May 6, 1994 ended May 6, 1994
June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994
------------- ---------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from redemptions. . . . $ 259 $ 4 $ 26 $23 $ - $ -
Cost . . . . . . . . . . . . . . 256 4 25 23 - -
------ --- ---- --- --- ---
Net realized gains (losses) on
redemptions of fund shares . . $ 3 $ - $ 1 $ - $ - $ -
------ --- ---- --- --- ---
------ --- ---- --- --- ---
</TABLE>
vi
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
5. CONTRACT OWNERS' TRANSACTIONS:
Unit transactions in each Sub-Account for the six months ended June 30,
1995 and the period from May 6, 1994 (date operations commenced) to
December 31, 1994, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR'S NORTHSTAR'S
INCOME AND NORTHSTAR'S MULTI-SECTOR
GROWTH FUND GROWTH FUND BOND FUND
------------------------------- ------------------------------- -------------------------------
Six months Period from Six months Period from Six months Period from
ended May 6, 1994 ended May 6, 1994 ended May 6, 1994
June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994
------------- ---------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding,
beginning of the year . . . . 100,955.441 - 8,738.734 - 15,492.534 -
Units purchased. . . . . . . . . 149,297.460 102,017.017 2,576.480 8,900.561 25,778.670 15,492.534
Units redeemed . . . . . . . . . (3,927.540) (1,061.576) (949.580) (626.685) - -
Units transferred between
Sub-Accounts and/or
Fixed Account . . . . . . . . (56,759.979) - - 464.858 (10,968.387) -
----------- ----------- ---------- --------- ---------- ----------
Units outstanding,
end of the period . . . . . . 189,565.382 100,955.441 10,365.634 8,738.734 30,302.817 15,492.534
----------- ----------- ---------- --------- ---------- ----------
----------- ----------- ---------- --------- ---------- ----------
<CAPTION>
FIDELITY'S VIPF FIDELITY'S VIPF II FIDELITY'S VIPF II
OVERSEAS ASSET MANAGER INDEX 500
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------- ------------------------------- -------------------------------
Six months Period from Six months Period from Six months Period from
ended May 6, 1994 ended May 6, 1994 ended May 6, 1994
June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994
------------- ---------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding,
beginning of the year . . . . - - - - - -
Units purchased. . . . . . . . . - - - - - -
Units redeemed . . . . . . . . . - - - - - -
Units transferred between
Sub-Accounts and/or
Fixed Account . . . . . . . . - - - - - -
---------- ----------- ---------- --------- ---------- ----------
Units outstanding,
end of the period . . . . . . - - - - - -
---------- ----------- ---------- --------- ---------- ----------
---------- ----------- ---------- --------- ---------- ----------
</TABLE>
vii
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
NORTHSTAR'S FIDELITY'S VIPF
HIGHT YIELD MONEY MARKET
BOND FUND PORTFOLIO
------------------------------- -------------------------------
Six months Period from Six months Period from
ended May 6, 1994 ended May 6, 1994
June 30, 1995 to Dec. 31, 1994 June 30, 1995 to Dec. 31, 1994
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Units outstanding,
beginning of the year . . . . 8,985.149 - - -
Units purchased. . . . . . . . . 33,979.520 10,139.023 - -
Units redeemed . . . . . . . . . (2,404.000) (658.699) - -
Units transferred between
Sub-Accounts and/or
Fixed Account . . . . . . . . 67,974.615 (495.175) - -
----------- ----------- ---------- ---------
Units outstanding,
end of the period . . . . . . 108,535.284 8,985.149 - -
----------- ----------- ---------- ---------
----------- ----------- ---------- ---------
</TABLE>
viii
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
6. COMBINING STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY.
Operations and changes in Contract Owners' equity for the six months ended
June 30, 1995 were as follows, (in thousands):
<TABLE>
<CAPTION>
NORTHSTAR'S NORTHSTAR'S NORTHSTAR'S
INCOME AND NORTHSTAR'S MULTI-SECTOR HIGH YIELD
TOTAL GROWTH FUND GROWTH FUND BOND FUND BOND FUND
------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Net investment income:
Reinvested dividend income . . . . . $70 $34 $1 $11 $24
Reinvested capital gains . . . . . . - - - - -
Administrative expenses . . . . . . (19) (12) (1) (2) (4)
------ ------ ---- ---- ------
Net investment income
and capital gains . . . . . . 51 22 - 9 20
------ ------ ---- ---- ------
Realized and unrealized gains:
Net realized gains on
redemptions of fund shares. . . . 16 11 1 3 1
Increase in unrealized
appreciation of investments . . . 180 147 12 13 8
------ ------ ---- ---- ------
Net realized and unrealized
gains . . . . . . . . . . . . . 196 158 13 16 9
------ ------ ---- ---- ------
Additions
from operations . . . . . . 247 180 13 25 29
------ ------ ---- ---- ------
Contract Owners' transactions:
Net purchase payments . . . . . . . 2,219 1,556 29 266 368
Surrenders . . . . . . . . . . . . . (76) (41) (10) - (25)
Transfers between Sub-Accounts
and/or Fixed Account . . . . . . - (592) - (115) 707
------ ------ ---- ---- ------
Net additions for
Contract Owners' transactions 2,143 923 19 151 1,050
------ ------ ---- ---- ------
Net additions
for the period. . . . . . . 2,390 1,103 32 176 1,079
Contract Owners' Equity,
beginning of the year . . . . . . . 1,355 1,021 90 156 88
------ ------ ---- ---- ------
Contract Owners' Equity,
end of the period . . . . . . . . . $3,745 $2,124 $122 $332 $1,167
------ ------ ---- ---- ------
------ ------ ---- ---- ------
</TABLE>
ix
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
FIDELITY'S VIPF FIDELITY'S VIPF FIDELITY'S VIPF II FIDELITY'S VIPF II
MONEY MARKET OVERSEAS ASSET MANAGER INDEX 500
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Net investment income:
Reinvested dividend income . . . . . $- $- $- $-
Reinvested capital gains . . . . . . - - - -
Administrative expenses . . . . . . - - - -
------ ------ ------ ------
Net investment income
and capital gains . . . . . . - - - -
------ ------ ------ ------
Realized and unrealized gains:
Net realized gains on
redemptions of fund shares. . . . - - - -
Increase in unrealized
appreciation of investments . . . - - - -
------ ------ ------ ------
Net realized and unrealized
gains . . . . . . . . . . . . . - - - -
------ ------ ------ ------
Additions
from operations . . . . . . - - - -
------ ------ ------ ------
Contract Owners' transactions:
Net purchase payments . . . . . . . - - - -
Surrenders . . . . . . . . . . . . . - - - -
Transfers between Sub-Accounts
and/or Fixed Account . . . . . . - - - -
------ ------ ------ ------
Net additions for
Contract Owners' transactions - - - -
------ ------ ------ ------
Net additions
for the period. . . . . . . - - - -
Contract Owners' Equity,
beginning of the year . . . . . . . - - - -
------ ------ ------ ------
Contract Owners' Equity,
end of the period . . . . . . . . . - - - -
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
x
<PAGE>
[Logo] NORTHSTAR/NWNL VARIABLE ACCOUNT AND NORTHSTAR FUNDS
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
(612) 372-5507
45081
<PAGE>
NORTHSTAR GROWTH FUND
MARKET ENVIRONMENT
- In the first half of 1995, stock prices rose sharply, 18.6% for the S&P
500 and 18.8% for the Dow Jones Industrials. As expected, the market
broadened during the second quarter so that most stocks rose, not just the
top 100.
- Stocks responded to continued excellent earnings, lower interest rates and
the prospect that the current slowdown in economic growth will foster an
extended period of moderate growth.
THE FUND
- For the six months, the Fund rose 15.4%. This lagged the major averages
because of a particularly slow start in the first quarter. In the second
quarter, strategy worked better and the Fund was up 11.7% vs. 8.8% for the
S&P 500.
- The strong performance was driven by the large holdings in the technology
sector such as National Semiconductor, Applied Materials, and Texas
Instruments. Also very strong were individual issues in other areas
including Citicorp, PMI(mortgage insurance), and Boeing.
- Holdings in consumer durables were pared back while additions were made in
financial, technology, basic materials, and specialty retailing.
CURRENT STRATEGY
- We remain bullish and are fully invested with minimal cash reserves. The
risk of profit-taking on any bad news is present but real fundamentals
remain strong.
- We expect several years of good earnings, greater recognition of U.S.
companies' exceptional competitive position, very reasonable valuations,
dramatic stock buybacks, dividend increases, and strong inflows into
equities.
- We favor industrial producers and expect recent underperformance of
defensive consumer staples and utilities to continue.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE FOR THE PERIOD ENDED 6/30/95)
-------------------------------------------------------------------------------------------------------------------
TOP 10 EQUITY HOLDINGS 5 TOP SECTORS ASSET ALLOCATION
NAME % ASSETS SECTORS % ASSETS
<S> <C> <C> <C> <C>
1 Citicorp 5.0 1 Technology 23.8 Common Stock 87.0%
2 National Semiconductor 4.4 2 Financial 19.7 Convertibles 8.5%
3 Xerox 4.1 3 Media & Services 11.8 Cash 4.5%
4 British Sky Broadcasting 3.3 4 Basic Materials 10.5
5 Applied Materials 3.3 5 Oil & Oil Services 8.9
6 International Paper 3.3
7 Mellon Bank 3.0
8 Philip Morris 2.8
9 AMP 2.8
10 Boeing 2.8
(Total % of Assets = 34.8%) (Total % of Assets = 74.7%) (Total Assets $3.2 mil.)
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
NORTHSTAR GROWTH FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
Market
Security Shares Value
-------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 88.79%
AEROSPACE - 2.78%
Boeing Co. 1,400 $ 87,675
AIRLINE - 1.45%
Alaska Air Group, Inc. 2,500 45,937
AUTOMOTIVE - 2.23%
General Motors Corp. 1,500 70,313
BANKS - 9.81%
BankAmerica Corp. 1,100 57,887
Citicorp 2,700 156,263
Mellon Bank Corp. (1) 2,300 95,737
309,887
CHEMICALS - 4.26%
Dow Chemical Co. 1,200 86,250
Du Pont (E.I.) De Nemours & Co. 700 48,125
134,375
ELECTRICAL EQUIPMENT - 4.39%
AMP, Inc. (1) 2,100 88,725
Emerson Electric Co. (1) 700 50,050
138,775
ENERGY - 8.81%
Amoco Corp. 700 46,637
Chevron Corp. 1,200 55,950
El Paso Natural Gas Co. (1) 1,000 28,500
Halliburton Co. 800 28,600
Mobil Corp. (1) 600 57,600
Sonat, Inc. (1) 2,000 61,000
278,287
ENTERTAINMENT/BROADCASTING - 4.74%
British Sky Broadcasting (2) 4,000 104,500
Time Warner Entertainment LP 1,100 45,238
149,738
FINANCIAL SERVICES - 9.05%
Federal National Mortgage Association 900 84,937
H&R Block, Inc. 1,000 41,125
MGIC Investment Corp. 900 42,188
Merrill Lynch & Co., Inc. 1,000 52,500
PMI Group, Inc. 1,500 65,063
285,813
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
NORTHSTAR GROWTH FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES VALUE
-------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 88.79%, CONTINUED
HEALTH CARE - 6.82%
Lilly (Eli) & Co. (1) 400 $ 31,400
Merck & Co., Inc. 1,000 49,000
Mylan Labs, Inc. 2,000 61,500
Sierra Health Services, Inc. 1,000 24,500
U.S. Healthcare, Inc. 1,600 49,000
215,400
INSURANCE - 1.93%
USF & G Corp. (1) 3,741 60,791
LODGING & RESTAURANTS - 0.80%
Marriot International, Inc. 700 25,112
OFFICE EQUIPMENT - 4.08%
Xerox Corp. 1,100 128,975
PAPER & FOREST PRODUCTS - 6.12%
Georgia Pacific Corp. 700 60,725
International Paper Co. 1,200 102,900
Scott Paper Co. 600 29,700
193,325
RETAIL - 5.10%
Borders Group, Inc. 2,500 35,938
Home Depot, Inc. 800 32,500
Office Depot, Inc. 1,200 33,750
Pep Boys - Manny, Moe & Jack (1) 2,200 58,850
161,038
TECHNOLOGY - 11.46%
Applied Materials, Inc. 1,200 103,950
Avnet, Inc. 700 33,862
Computer Associates International, Inc. 500 33,875
Microsoft Corp. 400 36,150
Seer Technologies, Inc. 600 12,450
Tektronix, Inc. 400 19,700
Texas Instruments, Inc. 500 66,938
Varian Associates, Inc. (1) 1,000 55,250
362,175
TOBACCO - 2.83%
Philip Morris, Inc. (1) 1,200 89,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NORTHSTAR GROWTH FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES VALUE
-------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 88.79%, CONTINUED
WIRELESS COMMUNICATION - 2.13%
Motorola, Inc. 1,000 $ 67,125
TOTAL COMMON STOCKS
(cost $2,475,876) 2,803,991
CONVERTIBLE PREFERRED STOCK - 6.32%
COMPUTER SERVICES - 1.93%
General Motors Corp.
$3.25 Class E 1,400 60,900
ELECTRONICS - 4.39%
National Semiconductor
Series A 5,000 138,750
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $146,446) 199,650
CONVERTIBLE BONDS - 2.42% PRINCIPAL AMOUNT
GAMING - 2.42%
Argosy Gaming Co.
12.00%, Subordinated Notes, 6/01/01 $ 75,000 76,313
TOTAL CONVERTIBLE BONDS
(cost $79,000) 76,313
SHORT TERM INVESTMENTS - 4.59%
REPURCHASE AGREEMENTS
Agreement with State Street Bank and Trust bearing interest at 5.80% dated
6/30/95, to be repurchased 7/03/95 in the amount of $145,070 and collateralized by
$150,000 U.S. Treasury Notes 6.125% due 5/15/98
(cost $145,000) 145,000
TOTAL INVESTMENTS SECURITIES - 102.12%
(cost $2,846,322) 3,224,954
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.12)% (66,825)
_________
NET ASSETS - 100.00% $3,158,129
---------
---------
<FN>
(1) Includes rights to purchase additional stock on the occurence of certain
events specified in the indenture.
(2) American Depository Receipts.
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
MARKET ENVIRONMENT
- In the first half of 1995, stock prices rose sharply, 18.6% for the S&P
500 and 18.8% for the Dow Jones Industrials. Bonds also did well as the
Lehman Government/Corporate Index gained 11.8%.
- Stocks responded to continued excellent earnings, lower interest rates
and the prospect that the current slowdown in economic growth will foster
an extended period of moderate growth.
THE FUND
- For the six months, the Fund rose 11.7%. This lagged the major averages
because of a particularly slow start in the first quarter. In the second
quarter, strategy worked better and the Fund was up 8.5% vs. 7.1% for the
Lipper Balanced Fund Index.
- The strong performance was driven particularly by the large holdings in
the technology sector such as National Semiconductor, Motorola and Texas
Instruments. Also very strong were individual issues in other areas
including Citicorp, PMl (mortgage insurance) and Boeing.
- The cash reserve of 13% at June 30th is being brought down. The
investments in consumer durables were cut back while additions were made
in the financial, technology, basic materials, and specialty retailing
sectors.
CURRENT STRATEGY
- We are maintaining our very positive outlook for equities and continue to
add to stocks. We favor industrial producers and financial specialties.
We have started positions in the depressed retail sector while selling
consumer defensive stocks and utilities.
- We expect continued favorable earnings and massive corporate stock
buybacks to support higher prices.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE FOR THE PERIOD ENDED 6/30/95)
---------------------------------------------------------------------------------------------------------
TOP 10 EQUITY HOLDINGS 5 TOP SECTORS ASSET ALLOCATION
NAME % ASSETS SECTORS % ASSETS
<S> <C> <C> <C> <C> <C>
1 Citicorp 3.0 1 Technology 19.2 Common Stock 54.6%
2 Xerox 2.6 2 Financial 14.2 Bonds 22.8%
3 National Semiconductor 2.5 3 Basic Materials 10.8 Convertibles 9.6%
4 Philip Morris 2.2 4 Oil & Oil services 10.5 Cash 13.0%
5 Mellon Bank 2.1 5 Media & Services 7.9
6 International Paper 2.0
7 Highwood Properties 2.0
8 Amp 1.9
9 Boeing 1.9
10 General Motors 1.9
(Total % of Assets = 22.1%) (Total % of Assets = 62.6%) (Total Assets $ 5.2 mil.)
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES VALUE
-------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 55.36%
AEROSPACE & DEFENSE - 1.87%
Boeing Co. 1,500 $ 93,937
AUTOMOTIVE - 1.87%
General Motors Corp. 2,000 93,750
BANKS - 6.51%
BankAmerica Corp. 1,400 73,675
Citicorp 2,600 150,475
Mellon Bank Corp. (1) 2,500 104,063
328,213
CHEMICALS - 2.80%
Dow Chemical Co. 1,200 86,250
Du Pont (E.I. De Nemours & Co. 800 55,000
141,250
ELECTRICAL EQUIPMENT - 2.78%
AMP, Inc. (1) 2,300 97,175
Emerson Electric Co. (1) 600 42,900
140,075
ENERGY - 7.16%
Amoco Corp. 1,000 66,625
Chevron Corp. 1,200 55,950
El Paso Natural Gas Co. (1) 1,500 42,750
Mobil Corp. (1) 600 57,600
Schlumberger LTD 500 31,062
Sonat, Inc. (1) 2,000 61,000
Texaco, Inc. (1) 700 45,937
360,924
ENTERTAINMENT/BROADCASTING - 1.56%
British Sky Broadcasting (2) 3,000 78,375
FINANCIAL SERVICES - 2.99%
Federal National Mortgage Association 800 75,500
H&R Block, Inc. 800 32,900
MGIC Investment Corp. 900 42,188
150,588
HEALTH CARE - 4.86%
Lilly (Eli) & Co. (1) 600 47,100
Merck & Co., Inc. 1,400 68,600
Mylan Labs, Inc. 2,300 70,725
U.S. Healthcare, Inc. 1,900 58,188
244,613
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES VALUE
-------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 55.36%, CONTINUED
LODGING & RESTAURANTS - 0.57%
Marriot International, Inc. 800 $ 28,700
OFFICE EQUIPMENT - 2.56%
Xerox Corp. 1,100 128,975
PAPER & FOREST PRODUCTS - 4.57%
Georgia Pacific Corp. 900 78,075
International Paper Co. 1,200 102,900
Scott Paper Co. 1,000 49,500
230,475
REAL ESTATE INVESTMENT TRUST - 4.29%
General Growth Properties, Inc. 2,000 40,750
Highwoods Properties, Inc. 4,000 102,000
OMEGA Healthcare Investors, Inc. 2,900 73,588
216,338
RETAIL - 1.92%
Home Depot, Inc. 1,200 48,750
Pep Boys - Manny, Moe & Jack (1) 1,800 48,150
96,900
TECHNOLOGY - 5.11%
Applied Materials, Inc. 900 77,962
Avnet, Inc. 800 38,700
Computer Associates International, Inc. 800 54,200
Tektronix, Inc. 400 19,700
Texas Instruments, Inc. 500 66,937
257,499
TOBACCO - 2.21%
Philip Morris, Inc. 1,500 111,563
WIRELESS COMMUNICATION - 1.73%
Motorola, Inc. 1,300 87,263
TOTAL COMMON STOCKS
(cost $2,501,919) 2,789,438
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES VALUE
-------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE PRFERRED STOCK - 4.50%
COMPUTER SERVICES - 1.21%
General Motors Corp.
$3.25 Class E 1,400 $ 60,900
ELECTRONICS - 2.48%
National Semiconductor
Series A 4,500 124,875
INSURANCE - 0.81%
Allstate Corp.
6.76%, Exchangeable Notes, 4/15/98 (3) 1,000 40,750
TOTAL CONVERTIBLE PREFERRED STOCK
(cost $172,002) 226,525
CONVERTIBLE BONDS - 5.23% PRINCIPLE AMOUNT
ENTERTAINMENT - 1.04%
Time Warner, Inc.
8.75%, Sr. Notes, 1/10/15 $ 50,000 52,187
GAMING - 1.21%
Argosy Gaming Co.
12.00%, Subordinated Notes, 6/01/01 60,000 61,050
REAL ESTATE INVESTMENT TRUST - 1.95%
Meditrust
7.50%, Subordinated Notes, 3/01/01 100,000 98,500
TRANSPORTATION - 1.03%
Alaska Air Group, Inc.
6.50%, Subordinated Notes, 6/15/05 50,000 51,828
TOTAL CONVERTIBLE BONDS
(cost $262,938) 263,565
CORPORATE BONDS - 4.66%
INSURANCE - 4.66%
Leucadia National Corp.
8.25%, Sr. Subordinated Notes, 6/15/05 125,000 125,601
Leucadia National Corp.
10.375%, Sr. Subordinated Notes, 6/15/02 100,000 109,375
234,976
TOTAL CORPORATE BONDS
(cost $230,125) 234,976
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT VALUE
-------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT SECURITIES - 18.47%
U.S. Treasury Notes
6.50%, 4/30/99 $175,000 $ 178,188
7.25%, 5/15/04 250,000 267,060
7.75%, 1/31/00 250,000 267,125
7.875%, 8/15/01 200,000 218,214
TOTAL U.S. GOVERNMENT SECURITIES
(cost $880,443) 930,587
SHORT TERM INVESTMENTS - 13.24%
REPURCHASE AGREEMENTS
Agreement with State Street Bank and Trust bearing interest at
5.80% dated 6/30/95, to be repurchased 7/03/95 in the amount of
$667,322 and collateralized by $675,000 U.S. Treasury Notes
6.125% due 5/15/98 (cost $667,000) 667,000
TOTAL INVESTMENTS SECURITIES - 101.46% 5,112,091
LIABILITIES IN EXCESS OF OTHER ASSETS - (1.46)% (68,087)
---------
NET ASSETS - 100% $5,044,004
----------
----------
<FN>
(1) Includes rights to purchase additional stock on the occurence of certain
events specified in the indenture.
(2) American Depository Receipts.
(3) Exchangeable Notes for PMI Group common stock.
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NORTHSTAR MULTI-SECTOR BOND FUND
THE ECONOMY
- Real Gross Domestic Product grew about 1.5% in the first half of 1995,
down from 5.1% in the fourth quarter of 1994 and 2.7% in the first quarter
of 1995. The word recession reappeared in discussions about future
prospects for the economy. Doubts about the softness of the economy's
landing grew as weaker economic data came in.
- The US dollar reached historic lows against the yen and approached
all-time lows against the deutsche mark. The weaker dollar and weak, but
continued, economic growth combined to cause Consumer Price Index
inflation to rise from 2.7% in 1994 to an annualized rate of 3.4% in the
first half of 1995. Despite those trends, anticipation of a cut in the
Federal Funds rate grew.
THE MARKETS
- Holders of government and investment grade bonds believed that inflation
was under control, so they bid up prices. Investment-grade investors
pursued yield among the higher-rated issues. US Treasury l0-year bonds had
a total return of almost 15% in the first half of 1995, while the 30-year
bond had a total return of almost 19%. Spreads of investment-grade bonds
over treasuries narrowed, with the most tightening among bonds maturing in
5 years or less.
- Recession fears, nervous selling and new issues caused spreads for high
yield and emerging market debt to widen. Strong cash inflows to mutual
funds, international aid to Mexico and Argentina, and rapid increases in
equity prices eventually helped those segments' bond prices to rise.
High-yield investors shifted from BB credits to B-rated credits after the
spread between those classes of bonds widened to near historical levels.
Many emerging-market investors displayed a strong preference for corporate
debt over sovereign debt.
THE FUND
- From 1/01/95 to 6/30/95, the total return of the Fund was 9.60%, compared
to the Lipper average of 10.68%.
- Several bonds were upgraded by the rating agencies to investment-grade
status (e.g., Viacom and Abbey).
- The size of the Fund makes it particularly difficult for the Fund to
invest in foreign paper.
CURRENT STRATEGY
- Maintain a stable Net Asset Value and an above-average yield by adjusting
sector allocations when necessary, within the limits of the Fund's size.
We will reduce the holdings of treasuries over time as we see other good
investment opportunities. We will also continue to maximize the high yield
allocation and limit the investment grade allocation.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA ARE FOR THE PERIOD ENDED 6/30/95) TOTAL NET ASSETS: $3,277,188
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOP 10 HOLDINGS SECTOR ALLOCATIONS CREDIT QUALITY
NAME % ASSETS SECTOR % ASSETS RATING % ASSETS
1 U.S.Treasury Note 31.4 U.S. Govemment Total 55 AAA-A 54.8
2 U.S. Treasury Note 15.6 Investment Grade BBB 6.6
3 GNMA II 6.4 - Domestic 12 BB 10.6
4 Leucadia National 3.3 - Foreign 0 B 20.8
5 Paramount Comm. 3.0 Total 12 CCC 0.0
6 Sheffield Steel 2.9 High Yield (HY) Not Rated 1.9
7 Farm Fresh 2.9 - Domestic 22 - Internal BB 0.0
8 Califonia Energy 2.6 - Foreign 2 - Internal B 0.0
9 Healthtrust 2.6 Total 24 - Internal CCC 1.9
10 Abbey Healthcare 2.5 Total Foreign (Counted Above)2 Cash/Other Assets 5.3
(Total % of Assets = 73.2%) (Max % HY Pemmitted = 50%) (Average Quality=BBB+)
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NORTHSTAR MULTI-SECTOR BOND FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT/UNITS VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT GRADE SECURITIES - 12.19%
CONTAINER - 1.69%
Owens-Illinois, Inc.
11.00%, Sr. Debentures, 12/01/03 $ 50,000 $ 55,312
ENTERTAINMENT - 2.95%
Paramount Communications, Inc.
8.25%, Sr. Notes, 8/01/22 100,000 96,652
HEALTHCARE - 2.56%
Healthtrust, Inc.
10.75%, Sr. Notes, 5/01/02 75,000 83,765
INSURANCE - 3.34%
Leucadia National Corp.
10.375%, Sr. Subordinated Notes, 6/15/02 100,000 109,375
RETAIL - 1.65%
Federated Department Stores, Inc.
10.00%, Sr. Notes, 2/15/01 50,000 54,125
TOTAL INVESTMENT GRADE SECURITIES
(cost $370,789) 399,229
HIGH YIELD SECURITIES - 24.24%
BROADCASTING/CABLE - 1.54%
Sinclair Broadcasting Group, Inc.
10.00%, Sr. Subordinated Notes, 12/15/03 50,000 50,500
CONSUMER PRODUCTS - 1.69%
Thermoscan, Inc.
13.4375%, Units, 8/15/01 (1) (2) 50 55,500
FOOD/BEVERAGE - 2.12%
Beatrice Foods
12.00%, Sr. Subordinated Notes, 12/01/01 75,000 69,375
FOOD SERVICE - 1.27%
American Restaurant Group, Inc.
12.00%, Sr. Notes, 9/15/98 50,000 41,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NORTHSTAR MULTI-SECTOR BOND FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
HIGH YIELD SECURITIES - 24.24%, CONTINUED
GROCERY - 5.39%
Dairy Mart Convenience Stores, Inc.
10.25%, Sr. Subordinated Notes, 3/15/04 $100,000 $82,000
Farm Fresh, Inc.
12.25%, Sr. Notes, 10/01/00 100,000 94,500
176,500
HEALTHCARE - 2.53%
Abbey Healthcare Group, Inc.
9.50%, Sr. Subordinated Notes, 11/01/02 80,000 83,000
PAPER - 1.73%
Grupo Industrial Durango S A
12.50%, Sr. Notes, 7/15/01 (3) 75,000 56,625
STEEL - 2.91%
Sheffield Steel Corp.
12.00%, Sr. Secured Notes, 11/01/01 100,000 95,500
TELECOMMUNICATIONS - 2.44%
Mobile Telecommunications Technologies Corp.
13.50%, Sr. Notes, 12/15/02 75,000 80,063
UTILITY - 2.62%
California Energy
0/10.25%, Sr. Discount Notes, 1/15/04 (4) 100,000 85,750
TOTAL HIGH YIELD SECURITIES
(cost $800,229) 794,563
PREFERRED STOCK - 3.26% SHARES
BANKING - 1.65%
First Nationwide Bank $11.50 500 54,000
OIL & GAS - 1.61%
Enron Capital Resources 9.00% 2,000 52,750
TOTAL PREFERRED STOCK
(cost $98,313) 106,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
NORTHSTAR MULTI-SECTOR BOND FUND
PORTFOLIO OF INVESTMENTS-(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS - 0.10%
CONSUMER PRODUCTS - 0.00%
Chattem, Inc. (expires 8/17/99) (5) (6) 50 $225
STEEL - 0.10%
Sheffield Steel Corp. (expires 11/01/01) (6) 500 3,125
TOTAL WARRANTS
(cost $2,000) 3,350
U.S. GOVERNMENT & AGENCIES - 54.76% PRINCIPAL AMOUNT
GNMA II Arm #8359, 5.50% $ 207,452 209,560
Resolution Trust Corp., 8.00%, 6/25/26 48,795 48,080
US Treasury Note, 6.50%, 5/15/05 500,000 510,570
US Treasury Note, 6.75%, 5/31/99 1,000,000 1,026,430
TOTAL U.S. GOVERNMENT & AGENCIES
(cost $1,760,289) 1,794,640
SHORT TERM INVESTMENTS - 4.52%
REPURCHASE AGREEMENTS
Agreement with State Street Bank and Trust bearing interest at 5.80% dated
6/30/95, to be repurchased 7/03/95 in the amount of $148,071 and
collateralized by $150,000 U.S. Treasury Notes due 5/15/98
(Cost $148,000) 148,000
TOTAL INVESTMENTS SECURITIES - 99.07%
(cost $3,179,620) 3,246,532
OTHER ASSETS LESS LIABILITIES - 0.93% 30,656
----------
NET ASSETS - 100.00% $3,277,188
----------
----------
<FN>
(1) Adjustable rate security.
(2) A unit consists of 1,000 par value Adjustable Rate, Sr. Subordinated Notes,
8/15/01 and 13 shares Class B common stock.
(3) Foreign Bond.
(4) Step Bond.
(5) Sale restricted to qualified institutional investors.
(6) Non - income producing securities.
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
NORTHSTAR HIGH YIELD BOND FUND
THE ECONOMY
- Real Gross Domestic Product grew about 1.5% in the first half of 1995,
down from 5.1% in the fourth quarter of 1994 and 2.7% in the first
quarter of 1995. The word recession reappeared in discussions about
future prospects for the economy. Doubts about the softness of the
economy's landing grew as weaker economic data came in.
- The US dollar reached historic lows against the yen and approached
all-time lows against the deutsche mark. The weaker dollar and weak, but
continued, economic growth combined to cause Consumer Price Index
inflation to rise from 2.7% in 1994 to an annualized rate of 3.4% in the
first half of 1995. Despite those trends, anticipation of a cut in the
Federal Funds rate grew.
THE MARKETS
- Holders of government and investment grade bonds believed that inflation
was under control, so they bid up prices. Stronger prices for those
securities helped support prices in the high yield and emerging markets.
- Recession fears, nervous selling and many new issues restrained prices
for high yield and emerging market debt during most of the quarter.
Strong cash inflows to mutual funds, international aid to Mexico and
Argentina, and rapid increases in equity prices eventually helped those
segments' bond prices rise.
- Investors' preferences shifted from BB credits to B-rated credits after
the spread between those classes of bonds widened to near historical
levels. Investors also displayed a strong preference for emerging market
corporate debt over sovereign debt in Mexico and Argentina.
THE FUND
- From 1/01/95 to 6/30/95, the total return of the Fund was 9.75%, compared
to the Lipper average of 9.72%.
- The size of the Fund makes it particularly difficult for the Fund to
invest in foreign paper.
- The Fund maintained above-average cash balances during the last 6 months.
CURRENT STRATEGY
- Maintain an average credit rating of at least B+ and add more bonds that
have equity kickers.
- We will seek to prudently increase our exposure to emerging markets,
within the constraints of the Fund's size.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
FUND INFORMATION (ALL DATA FOR THE PERIOD ENDED 6/30/95) TOTAL NET ASSETS: $3,917,350
----------------------------------------------------------------------------------------------------
TOP 10 HOLDINGS TOP 5 INDUSTRIES CREDIT QUALITY
NAME % ASSETS INDUSTRY % ASSETS RATING % ASSETS
<S> <C> <C> <C> <C> <C>
1 U.S. Treasury 13.0 1 Government 13.0 AAA-A 13.0
2 Abbey Healthcare 2.7 2 Broadcasting/Cable 12.9 BBB 6.0
3 Central Rents 2.6 3 Steel 9.9 BB 13.8
4 Paramount Comm. 2.5 4 Health Care 6.2 B 52.7
5 Spanish Broadcasting 2.4 5 Retail 5.6 CCC 2.2
6 Sheffield Steel 2.4 NotRated 8.0
7 Farm Fresh 2.4 - Internal BB 5.4
8 California Energy 2.2 - Internal B 3.6
9 Inland Steel 2.2 - Internal CCC 1.2
10 Healthtrust 2.1 Cash/OtherAssets 4.3
(Total % of Assets = 34.5%) (Total % of Assets = 47.6%) (Average Quality=BB-)
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
NORTHSTAR HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS - (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPLE AMOUNT/ MARKET
SECURITY UNITS VALUE
-----------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS & NOTES - 66.99%
BANKING - 3.84%
Berkeley Federal Bank
12.00%, Sr. Debentures Notes, 6/15/05 $ 75,000 $ 75,188
Coastal Bancorp, Inc.
10.00%, Sr. Notes, 6/30/02 75,000 75,281
150,469
BROADCASTING/CABLE - 10.61%
Adelphia Communications Corp.
9.50%, Sr. Notes, 2/15/04 (1) 78,563 66,385
Chancellor Broadcasting Co.
12.50%, Sr. Subordinated Notes, 10/01/04 75,000 75,375
Echostar Communications Corp.
0/12.875%, Units, 6/01/04 (2) (3) 100 56,500
Panamsat Corp.
0/11.375%,Sr. Subordinated Notes, 8/01/03 (2) 100,000 71,500
Sinclair Broadcasting Group, Inc.
10.00%, Sr. Subordinated Notes, 12/15/03 50,000 50,500
Spanish Broadcasting Systems, Inc.
7.50/12.50%, Sr. Notes, 6/15/02 (2) 100,000 95,500
415,760
CHEMICALS - 1.95%
Terra Industries Inc.
10.50%, Sr. Notes, 6/15/05 75,000 76,500
CONSUMER PRODUCTS - 4.53%
International Semi-Tech Corp.
0/11.50%, Sr. Secured Notes, 8/15/03 (2) 100,000 50,250
Marvel Holding, Inc.
0, Sr. Secured Notes, 4/15/98 100,000 71,750
Thermoscan, Inc.
11.50%, Units, 8/15/01 (4) (5) (6) 50 55,500
177,500
ENERGY - 2.19%
California Energy
0/10.25%, Sr. Discount Notes, 1/15/04 (2) 100,000 85,750
ENTERTAINMENT - 2.47%
Paramount Communications, Inc.
8.25%, Sr. Notes, 8/01/22 100,000 96,652
FINANCE - 1.64%
GPA Delaware, Inc.
8.75%, Medium Term Notes, 12/15/98 (4) 75,000 64,125
</TABLE>
The accompanying motes are an integral part of the financial statements.
15
<PAGE>
NORTHSTAR HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS - (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPLE MARKET
SECURITY AMOUNT VALUE
-----------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS & NOTES - 66.99%, CONTINUED
FOOD/BEVERAGE - 1.77%
Beatrice Foods
12.00%, Sr. Subordinated Notes, 12/01/01 $ 75,000 $ 69,375
FOOD SERVICE - 1.06%
American Restaurant Group, Inc.
12.00%, Sr. Notes, 9/15/98 50,000 41,750
FOOD WHOLESALER - 0.96%
Di Giorgio Corp.
12.00%, Sr. Notes, 2/15/03 50,000 37,500
GROCERY - 4.50%
Dairy Mart Convenience Stores, Inc.
10.25%, Sr. Subordinated Notes, 3/15/04 100,000 82,000
Farm Fresh, Inc.
12.25%, Sr. Notes, 10/01/00 100,000 94,500
176,500
HEALTHCARE - 4.79%
Abbey Healthcare Group, Inc.
9.50%, Sr. Subordinated Notes, 11/01/02 100,000 103,750
Healthtrust, Inc.
10.75%, Sr. Notes, 5/01/02 75,000 83,765
187,515
HOTELS & GAMING - 2.35%
Capital Gaming International, Inc.
11.50%, Sr. Notes, 2/01/01 50,000 23,250
GB Property Funding Corp.
10.875%, 1st Mortgage Notes, 1/15/04 50,000 43,500
Hemmeter Enterprises, Inc.
12.00%, Sr. Notes, 12/15/00 (1) (4) 53,000 25,175
91,925
PRINTING/PUBLISHING - 1.51%
Affiliated Newspapers Investments, Inc.
0/13.25%, Sr. Discount Notes, 7/01/06 (2) 100,000 59,000
RETAIL - 5.52%
Central Rents, Inc.
12.875%, Sr. Notes, 12/15/03 100,000 99,750
Duane Reade Corp.
12.00%, Sr. Notes, 9/15/02 75,000 62,250
Federated Department Stores, Inc.
10.00%, Sr. Notes, 2/15/01 50,000 54,125
216,125
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
NORTHSTAR HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS - (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPLE MARKET
SECURITY AMOUNT/UNITS VALUE
-----------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS & NOTES - 66.99%, CONTINUED
STEEL - 9.84%
Acme Metals Inc.
0/13.50%, Sr. Secured Discount Notes, 8/01/04 (2) $ 100,000 $ 75,500
Carbide/Graphite Group, Inc.
11.50%, Sr. Notes, 9/01/03 50,000 52,750
Inland Steel Industries, Inc.
12.75%, Sr. Notes, 12/15/02 75,000 84,094
Renco Metals, Inc.
12.00%, Sr. Notes, 7/15/00 75,000 77,719
Sheffield Steel Corp.
12.00%, 1st Mortgage Notes, 11/01/01 100,000 95,500
385,563
TELECOMMUNICATIONS - 5.35%
Heartland Wireless Communications, Inc.
13.00%, Units, 4/15/03 (4) (7) 75 79,875
Mobile Telecommunication Technologies Corp.
13.50%, Sr. Notes, 12/15/02 75,000 80,062
Nextel Communications, Inc.
0/9.75%, Sr. Discount Notes, 8/15/04 (2) 100,000 49,500
209,437
TRANSPORTATION - 2.11%
Burlington Motor Holdings, Inc.
11.50%, Sr. Notes, 11/01/03 100,000 82,500
TOTAL CORPORATE BONDS & NOTES
(cost $2,637,253) 2,623,946
FOREIGN BONDS & NOTES - 10.16%
BROADCASTING/CABLE - 1.86%
Grupo Televisa SA de CV
9.5625%, Debentures, 4/07/96 (5) 75,000 72,750
FOOD/BEVERAGE - 1.74%
Gruma SA
9.75%, Sr. Notes, 3/09/98 75,000 68,250
OIL & GAS - 1.57%
Petroleos Mexicano
7.3125%, Sr. Secured Notes, 3/08/99 75,000 61,875
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
NORTHSTAR HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS - (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPLE MARKET
SECURITY AMOUNT VALUE
-----------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN BONDS & NOTES - 10.16%, CONTINUED
PAPER - 3.20%
Empaques Ponderosa
8.750%, Sr. Notes, 12/06/96 $ 75,000 $ 68,719
Grupo Industrial Durango S A
12.00%, Sr. Notes, 7/15/01 75,000 56,625
125,344
UTILITY - 1.79%
Invergas SA
12.50%, Sr. Notes, 12/16/99 75,000 69,937
TOTAL FOREIGN BONDS & NOTES
(Cost $392,212) 398,156
COMMON STOCK - 0.08% (8) SHARES
HOTELS & GAMING - 0.02%
Capital Gaming International, Inc. 1,135 780
PRINTING/PUBLISHING - 0.06%
Affiliated Newspapers Investments, Inc. 100 2,500
TOTAL COMMON STOCK
(cost $8,666) 3,280
PREFERRED STOCK - 4.82%
BANKING - 1.38%
First Nationwide Bank $11.50 500 54,000
CONGLOMERATE - 2.01%
BCP Essex Holdings $3.75 3,000 78,750
HEALTHCARE - 1.43%
Foxmeyer Health Corp $4.20 (1) 1,539 55,981
TOTAL PREFERRED STOCK
(cost $177,420) 188,731
WARRANTS - 0.63% (8)
BROADCASTING/CABLE - 0.47%
Spanish Broadcasting Systems, Inc. (expires 6/30/99) 100 18,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
NORTHSTAR HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS - (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES VALUE
-----------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS - 0.63% (8), CONTINUED
CONSUMER PRODUCTS - 0.01%
Chattem, Inc. (expires 8/17/99) (4) 50 $ 225
GAMING - 0.01%
Capital Gaming International, Inc. (expires 2/01/99) 1,012 253
RETAIL - 0.06%
Central Rents, Inc. (expires 12/15/03) 100 2,500
STEEL - 0.08%
Sheffield Steel Corp. (expires 11/01/01) 500 3,125
TOTAL WARRANTS
(cost $19,064) 24,603
U.S. GOVERNMENT SECURITIES - 13.03% PRINCIPAL AMOUNT
U.S. Treasury Note, 6.50% due 5/15/05 $500,000 510,570
TOTAL U.S. GOVERNMENT SECURITIES
(cost $514,530) 510,570
SHORT TERM INVESTMENTS - 7.02%
REPURCHASE AGREEMENTS
Agreement with State Street Bank and Trust bearing
interest at 5.80% dated 6/30/95, to be repurchased
7/03/95 in the amount of $275,133 and collateralized
by $280,000 U.S. Treasury Notes, 6.125% due 5/15/98
(cost $275,000) 275,000
TOTAL INVESTMENTS SECURITIES - 102.73%
(cost $4,024,145) 4,024,286
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.73)% (106,936)
----------
NET ASSETS - 100.00% $3,917,350
----------
----------
<FN>
(1) Payment-in-kind security.
(2) Step bond.
(3) A unit consists of 1,000 par value 0/12.875%, Sr. Secured Discount Notes,
6/01/04 and 6 warrants.
(4) Sale restricted to qualified institutional investors.
(5) Adjustable rate security.
(6) A unit consists of 1,000 par value Adjustable Rate, Sr. Subordinated Notes,
8/15/01 and 13 shares Class B common stock.
(7) A unit consists of 1,000 par value 13.00%, Sr. Notes, 4/15/03 and 6 warrants.
(8) Non-income producing securities.
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
NORTHSTAR/NWNL TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NORTHSTAR NORTHSTAR NORTHSTAR
NORTHSTAR INCOME & MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND BOND FUND BOND FUND
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $2,701,322, $4,047,427, $3,031,620
and $3,749,145, respectively). . . . . . . . . . . . . . . . $3,079,954 $4,445,091 $3,098,532 $3,749,286
Repurchase agreements. . . . . . . . . . . . . . . . . . . . 145,000 667,000 148,000 275,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 140 44 104
Dividends and interest receivable. . . . . . . . . . . . . . 5,688 30,646 37,256 61,022
Receivable for shares of beneficial interest sold. . . . . . 3,387 5,300 3,387 -
Receivable due from adviser. . . . . . . . . . . . . . . . . 1,865 1,215 2,452 2,240
Receivable for investments sold. . . . . . . . . . . . . . . - - - 76,270
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 2,190 1,895 2,190 2,190
--------- --------- --------- ---------
Total Assets. . . . . . . . . . . . . . . . . . . . 3,238,480 5,151,287 3,291,861 4,166,112
--------- --------- --------- ---------
LIABILITIES:
Payable for investments purchased. . . . . . . . . . . . . . 73,065 98,354 - 228,442
Custodian and fund accounting fees payable . . . . . . . . . 2,750 3,268 2,230 3,800
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . 3,170 4,374 4,421 3,146
Printing fees payable. . . . . . . . . . . . . . . . . . . . 778 778 778 777
Dividend payable . . . . . . . . . . . . . . . . . . . . . . - - 5,276 8,347
Taxes payable. . . . . . . . . . . . . . . . . . . . . . . . - - 1,411 1,980
Payable for shares of beneficial interest reacquired . . . . - - - 1,628
Other expenses . . . . . . . . . . . . . . . . . . . . . . . 588 509 557 642
--------- --------- --------- ---------
Total Liabilities . . . . . . . . . . . . . . . . . 80,351 107,283 14,673 248,762
--------- --------- --------- ---------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $3,158,129 $5,044,004 $3,277,188 $3,917,350
--------- --------- --------- ---------
--------- --------- --------- ---------
NET ASSETS WERE COMPOSED OF:
Shares of beneficial interest, $.01 par value outstanding
(unlimited shares authorized) Paid in capital. . . . . . . . $2,761,068 $4,665,407 $3,199,093 $3,945,686
Undistributed (overdistributed)
net investment income. . . . . . . . . . . . . . . . . . 1,093 4,508 720 (1,179)
Accumulated net realized gain (loss) on investments. . . . . 17,336 (23,575) 10,463 (27,298)
Net unrealized appreciation of investments . . . . . . . . . 378,632 397,664 66,912 141
--------- --------- --------- ---------
Net assets. . . . . . . . . . . . . . . . . . . . . $3,158,129 $5,044,004 $3,277,188 $3,917,350
--------- --------- --------- ---------
--------- --------- --------- ---------
Net Asset Value Per Share ($3,158,129/275,279 shares,
$5,044,004/462,559 shares, $3,277,188/640,314 shares
and $3,917,350/796,165 shares, respectively). . . . . . . . . $11.47 $10.90 $5.12 $4.92
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
NORTHSTAR/NWNL TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NORTHSTAR NORTHSTAR NORTHSTAR
NORTHSTAR INCOME & MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND BOND FUND BOND FUND
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,470 $ 44,438 $ 4,112 $ 895
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 8,549 56,632 125,456 159,816
--------- --------- --------- ---------
Total investment income. . . . . . . . . . . . . . . . . . . 42,019 101,070 129,568 160,711
--------- --------- --------- ---------
EXPENSES
Investment advisory and management fees. . . . . . . . . . . 10,614 16,330 11,057 11,642
Custodian and fund accounting fees . . . . . . . . . . . . . 9,153 10,544 8,075 11,131
Trustee fees and expenses. . . . . . . . . . . . . . . . . . 4,100 4,300 4,150 4,250
Administrative services fees . . . . . . . . . . . . . . . . 1,415 2,177 1,474 1,552
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . 3,170 4,374 4,421 3,146
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . 381 381 381 381
Insurance expense. . . . . . . . . . . . . . . . . . . . . . 312 312 312 312
Registration fee . . . . . . . . . . . . . . . . . . . . . . 979 979 979 979
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . 532 801 532 532
--------- --------- --------- ---------
30,656 40,198 31,381 33,925
Less expenses reimbursed by management company . . . . . . . 19,282 23,095 19,587 21,508
--------- --------- --------- ---------
Total expenses . . . . . . . . . . . . . . . . . . . . 11,374 17,103 11,794 12,417
--------- --------- --------- ---------
Net Investment income. . . . . . . . . . . . . . . . . . . . 30,645 83,967 117,774 148,294
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain(loss) on investments . . . . . . . . . . . 20,980 (17,010) 13,527 (26,004)
Net change in unrealized appreciation of investments . . . . 368,084 430,046 145,587 160,344
--------- --------- --------- ---------
Net realized and unrealized gain on investments . . . . 389,064 413,036 159,114 134,340
--------- --------- --------- ---------
Increase in net assets resulting from operations . . . . . . $419,709 $497,003 $276,888 $282,634
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
NORTHSTAR/NWNL TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NORTHSTAR NORTHSTAR NORTHSTAR
NORTHSTAR INCOME & MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND BOND FUND BOND FUND
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . $ 30,645 $ 83,967 $ 117,774 $ 148,294
Net realized gain (loss) on investments . . . . . . . . . 20,980 (17,010) 13,527 (26,004)
Net change in unrealized appreciation
of investments. . . . . . . . . . . . . . . . . . . . . 368,084 430,046 145,587 160,344
--------- --------- --------- ---------
Increase in net assets resulting
from operations. . . . . . . . . . . . . . . . . . . 419,709 497,003 276,888 282,634
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income. . . . . . . . . . . . . . . . . (29,492) (79,933) (117,404) (147,179)
--------- --------- --------- ---------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares . . . . . . . . . . . 48,336 1,749,725 554,167 1,073,768
Net asset value of shares issued to
shareholders in reinvestment of dividends . . . . . 29,492 79,933 114,364 146,844
--------- --------- --------- ---------
77,828 1,829,658 668,531 1,220,612
Cost of shares redeemed . . . . . . . . . . . . . . . . (10,855) (797,306) (266,970) (26,875)
--------- --------- --------- ---------
Net Increase in net assets derived from capital
share transactions . . . . . . . . . . . . . . . . . 66,973 1,032,352 401,561 1,193,737
--------- --------- --------- ---------
Net increase in net assets . . . . . . . . . . . . . . . . . 457,190 1,449,422 561,045 1,329,192
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . 2,700,939 3,594,582 2,716,143 2,588,158
--------- --------- --------- ---------
End of period (including (overdistributed)
undistributed net investment income of $1,093,
$4,508, $720 and ($1,179), respectively) . . . . . . . . . . $3,158,129 $5,044,004 $3,277,188 $3,917,350
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
NORTHSTAR/NWNL TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
1994
<TABLE>
<CAPTION>
NORTHSTAR NORTHSTAR NORTHSTAR
NORTHSTAR INCOME & MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND BOND FUND BOND FUND
----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income... . . . . . . . . . . . . $ 40,463 $ 56,590 $ 121,217 $ 144,652
Net realized gain (loss) on investments . . . . 35,404 19,899 (3,064) (1,294)
Net change in unrealized appreciation
(depreciation) of investments . . . . . . . . 10,548 (32,382) (78,675) (160,203)
---------- ---------- ---------- -----------
Increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . 86,415 44,107 39,478 (16,845)
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income . . . . . . . . . . . . (40,523) (56,116) (120,867) (146,946)
Net realized gain on investments. . . . . . . (39,048) (26,464) - -
---------- ---------- ---------- -----------
(79,571) (82,580) (120,867) (146,946)
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares. . . . . . . 2,603,764 3,550,237 2,658,072 2,610,124
Net asset value of shares issued to
shareholders in reinvestment of dividends 79,571 82,580 118,629 138,933
---------- ---------- ---------- -----------
2,683,335 3,632,907 2,776,701 2,749,057
Cost of shares redeemed . . . . . . . . . . . (14,240) (24,852) (4,169) (22,108)
---------- ---------- ---------- -----------
Net increase in net assets derived from capital
share transactions . . . . . . . . . . . . . . 2,669,095 3,608,055 2,772,532 2,726,949
---------- ---------- ---------- -----------
Net increase in net assets . . . . . . . . . . . . 2,675,939 3,569,582 2,691,143 2,563,158
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . 25,000 25,000 25,000 25,000
---------- ---------- ---------- -----------
End of period (including (overdistributed)
undistributed net investment income of ($60),
$474, $350, and ($2,294), respectively). . . . . . $2,700,939 $3,594,582 $2,716,143 $2,588,158
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
NORTHSTAR/NWNL TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET NET REALIZED & TOTAL DIVIDENDS DISTRIBUTIONS
VALUE, NET UNREALIZED FROM DECLARED FROM NET DECLARED
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT FROM NET
PERIOD ENDED OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME REALIZED GAINS
------------ ----------- ---------- --------------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
NORTHSTAR GROWTH FUND
5/06/94-
12/31/94 $10.00 $0.16 $0.19 $0.35 $(0.16) $(0.15)
6/30/95 10.04 0.11 1.43 1.54 (0.11) 0.00
NORTHSTAR INCOME AND GROWTH FUND
5/06/94-
12/31/94 10.00 0.20 (0.01) 0.19 (0.20) (0.07)
6/30/95 9.92 0.19 0.97 1.16 (0.18) 0.00
NORTHSTAR MULTI-SECTOR FUND
5/06/94-
12/31/94 5.00 0.23 (0.15) 0.08 (0.23) 0.00
6/30/95 4.85 0.19 0.27 0.46 (0.19) 0.00
NORTHSTAR HIGH YIELD FUND
5/06/94-
12/31/94 5.00 0.28 (0.31) (0.03) (0.28) 0.00
6/30/95 4.69 0.22 0.23 0.45 (0.22) 0.00
(1) Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF EXPENSE
NET ASSETS NET ASSETS, EXPENSES REIMBURSEMENT
TOTAL VALUE, END END OF PERIOD TO AVERAGE TO AVERAGE
PERIOD ENDED DISTRIBUTIONS OF PERIOD TOTAL RETURN (000'S) NET ASSETS (1) NET ASSETS (1)
------------ ------------- ----------- ------------ ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
NORTHSTAR GROWTH FUND
5/06/94- ($0.31) $10.04 3.47% $2,701 1.00% 1.45%
12/31/94 (0.11) 11.47 15.40 3,158 0.80 1.36
6/30/95
NORTHSTAR INCOME AND GROWTH FUND
5/06/94- (0.27) 9.92 2.02 3,595 1.00 1.43
12/31/94 (0.18) 10.90 11.72 5,039 0.79 1.06
6/30/95
NORTHSTAR MULTI-SECTOR FUND
5/06/94- (0.23) 4.85 1.41 2,716 1.00 1.41
12/31/94 (0.19) 5.12 9.58 3,274 0.80 1.33
6/30/95
NORTHSTAR HIGH YIELD FUND
5/06/94- (0.28) 4.69 (0.95) 2,588 1.00 1.55
12/31/94 (0.22) 4.92 9.75 3,919 0.80 1.39
6/30/95
RATIO OF NET
INVESTMENT
INCOME
TO AVERAGE PORTFOLIO
PERIOD ENDED NET ASSETS (1) TURNOVER
------------ -------------- ---------
<S> <C> <C>
NORTHSTAR GROWTH FUND
5/06/94- 2.31% 61%
12/31/94 2.17 65
6/30/95
NORTHSTAR INCOME AND GROWTH FUND
5/06/94- 3.11 45
12/31/94 3.86 44
6/30/95
NORTHSTAR MULTI-SECTOR FUND
5/06/94- 7.03 29
12/31/94 7.96 47
6/30/95
NORTHSTAR HIGH YIELD FUND
5/06/94- 8.62 62
12/31/94 9.55 58
6/30/95
(1) Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
NORTHSTAR/NWNL TRUST
Notes to Financial Statements - June 30, 1995 (Unaudited)
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. The Northstar/NWNL Trust is a business trust organized under the
laws of the Commonwealth of Massachusetts on December 17, 1993. The names of
the four investment series which comprise the Trust (the "Funds") and their
respective investment objectives are set forth below. Each Fund commenced
offering shares on May 6, 1994.
NORTHSTAR GROWTH FUND ("GROWTH FUND") is a diversified portfolio with an
investment objective of long-term growth of capital through investments in
common stocks and convertible securities that the Adviser believes provide
above-average potential for capital appreciation.
NORTHSTAR INCOME AND GROWTH FUND ("INCOME AND GROWTH FUND") is a
diversified portfolio with the investment objective of current income
balanced with the objective of achieving capital appreciation. The Fund
will seek to achieve its objective through investments in a diversified
group of securities selected for their prospects of current yield and
capital appreciation.
NORTHSTAR MULTI-SECTOR BOND FUND ("MULTI-SECTOR FUND") is a diversified
portfolio whose investment objective is to maximize current income. The
Fund seeks to achieve its objective by investing in U.S. Government Bonds,
Foreign Government Bonds, Investment Grade Bonds and High Yield Bonds, each
as defined in the Prospectus for the Trust.
NORTHSTAR HIGH YIELD BOND FUND ("HIGH YIELD FUND") is a diversified
portfolio whose investment objective is to seek high income. The Fund
invests primarily in a diversified group of fixed income securities,
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.
SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS TO
SHAREHOLDERS. Security transactions are recorded on the trade date. Realized
gains or losses on sales of investments are calculated on the identified cost
basis. Interest income is recorded on the accrual basis except when collection
is not expected; discounts are accrued, and premiums amortized, to par at
maturity; dividend income is recorded on the ex-dividend dates. Dividends from
net investment income are declared and paid quarterly by the Funds.
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. Distributions to
shareholders from net investment income and net realized gain from security
transactions are reinvested at net asset value by each Fund on the ex-dividend
date.
REPURCHASE AGREEMENTS. The Funds' custodian takes possession of collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a marked-to-market basis to assure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Funds have the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
FEDERAL INCOME TAXES. The Trust intends to comply with the special provisions of
the Internal Revenue Code available to investment companies and to distribute
all of the taxable net income to their respective shareholders. Therefore, no
Federal income tax provision or excise tax provision is required.
ORGANIZATION COSTS. Costs incurred by the Trust in connection with its
organization of each Fund have been deferred and are being amortized over a
period of five years from the date the Funds commenced operations.
26
<PAGE>
NOTE 2. INVESTMENT ADVISER AND ADMINISTRATOR. Northstar Investment Management
Corporation (the "Adviser") serves as each Fund's investment adviser. Each Fund
pays the Adviser an investment advisory fee calculated at an annual rate of .75%
of average daily net assets. For the six months ended June 30, 1995, the Adviser
earned $49,643 in investment advisory fees. Northstar Administrators Corporation
(the "Administrator"), an affiliate of the Adviser, serves as each Fund's
administrator. Each Fund pays the Administrator a fee calculated at an annual
rate of .10% of average daily net assets. For the six months ended June 30,
1995, the Administrator earned $6,618 in Administrative fees. The Adviser has
agreed that if a Funds' total operating expenses exceed .80% annually, the
Adviser will reimburse the Fund for amounts in excess of such limit. The Adviser
has reimbursed the Growth Fund $19,282, the Income and Growth Fund $23,095, the
Multi-Sector Bond Fund $19,587 and the High Yield Bond Fund $21,508.
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 six months ended June 30, 1995, were
as follows:
<TABLE>
<CAPTION>
NORTHSTAR NORTHSTAR NORTHSTAR
NORTHSTAR INCOME AND MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND FUND FUND
<S> <C> <C> <C> <C>
Aggregate Purchases $1,904,747 $2,967,541 $1,977,789 $3,640,427
Aggregate Sales 1,733,718 1,688,799 1,263,294 2,236,456
</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 June 30, 1995, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR NORTHSTAR NORTHSTAR
NORTHSTAR INCOME AND MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND FUND FUND
<S> <C> <C> <C> <C>
Cost (tax basis) $2,701,322 $4,047,427 $3,031,620 $3,749,145
Appreciated Securities 427,372 450,403 96,392 91,859
Depreciated Securities 48,740 52,739 29,480 91,718
Net Unrealized Appreciation/ 378,632 397,664 66,912 141
Depreciation
</TABLE>
NOTE 5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each Fund for the six months ended June 30,
1995, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR NORTHSTAR NORTHSTAR
NORTHSTAR INCOME AND MULTI-SECTOR HIGH YIELD
GROWTH FUND GROWTH FUND FUND FUND
<S> <C> <C> <C> <C>
Shares Sold 4,417 170,751 111,234 219,237
Reinvested Dividends 2,730 7,565 22,662 30,203
Shares Repurchased (1,018) (77,997) (53,691) (5,505)
_______ _______ _______ _______
NET INCREASE 6,129 100,319 80,205 243,935
</TABLE>
27
<PAGE>
TRUSTEES
Paul S. Doherty Mark L. Lipson John R. Smith
Alan L. Gosule David W. C. Putnam David W. Wallace
Robert B. Goode John G. Turner Marjory D. Williams
PRINCIPAL OFFICERS
John G. Turner - Chairman Geoffrey Wadsworth - Vice President
Mark L. Lipson - President Lisa Hurley - Vice President and Secretary
Thomas Ole Dial - Vice President Agnes Mullady - Vice President and Treasurer
Ernest N. Mysogland - Vice President
28
