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File No. 33-73140
811-8220
As filed with the Securities and Exchange Commission on May 16, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form N1-A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 7
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 8
NORTHSTAR VARIABLE TRUST
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(Exact name of Registrant as specified in charter)
Two Pickwick Plaza, Greenwich, CT 06830
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(Address of Principal Executive Offices)
(203) 863-6200
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(Registrant's telephone number)
Mark L. Lipson
c/o Northstar Investment Management Corporation
Two Pickwick Plaza, Greenwich, Connecticut 06830
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(Name and address of agent for service)
Copies of all correspondence to:
Jeffrey L. Steele, Esq.
Dechert Price & Rhoads
1500 K St., N.W., Suite 500
Washington, D.C. 20005
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
immediately upon filing pursuant to paragraph (b)
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on [date] pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on [date] pursuant to paragraph (a)(1)
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X 75 days after filing pursuant to paragraph (a)(2)
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on [date] pursuant to paragraph (a)(2) of Rule 485.
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If appropriate, check the following box:
____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
__________________________________________________________________________
* Registrant has registered an indefinite number of shares of beneficial
interest by its initial Registration Statement pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended, which became effective May
6, 1994. Registrant filed the notice required by Rule 24f-2 with respect to
its most recent fiscal year on February 14, 1997.
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NORTHSTAR VARIABLE TRUST
CROSS REFERENCE SHEET
The enclosed materials relate only to the Northstar International Value
Fund which is a separate investment series of the Northstar Variable Trust (the
"Trust") and do not amend in any respect the Trust's other investment series.
Information relating to the Trust's other investment series is contained in
previously filed Post-Effective Amendments.
FORM N-1A Part A Item PROSPECTUS CAPTION
1. Cover Page Cover Page
2. Synopsis Cover Page
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Investment Programs;
Investment Objectives and Policies;
Other Investment Strategies
and Techniques; Risk Factors;
General Information
5. Management of the Fund Management of the Funds
6. Capital Stock and Other How Net Asset Value is
Securities Determined; Dividends,
Distributions and Taxes;
Performance Information;
General Information
7. Purchases of Securities Being Purchase of Shares; How Net Asset
Value is Determined.
8. Redemption or Repurchase Redemption of Shares; How Net Asset
Value is Determined
9. Legal Proceedings Not Applicable
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NORTHSTAR VARIABLE TRUST
CROSS REFERENCE SHEET
FORM N-1A Part B Item CAPTION IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information & History Cover Page; Other Information
13. Investment Objectives & Policies Cover Page; Investment Objectives
and Policies; Investment
Restrictions; Other Investment
Techniques
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal N/A
Holders of Securities
16. Investment Advisory and Services of the Adviser and
Other Services Administrator; Services of the
Subadviser
17. Brokerage Allocation and Portfolio Transactions and
Other Practices Brokerage Allocation; Portfolio
Turnover
18. Capital Stock and Other Securities Purchases, Redemptions and
Exchange Transactions
19. Purchases, Redemptions and Net Asset Value; Purchases,
Pricing Redemption and Exchange
Transaction; Dividends and
Distributions
20. Tax Status Federal Income Tax Status
21. Underwriter Not Applicable
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
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PROSPECTUS AUGUST 1, 1997
NORTHSTAR VARIABLE TRUST
NORTHSTAR INTERNATIONAL VALUE FUND
Two Pickwick Plaza (203) 863-6200
Greenwich, Connecticut 06830 (800) 595-7827
Northstar International Value Fund (the "Fund") is a separate diversified
investment portfolio of Northstar Variable Trust (formerly "Northstar/NWNL
Trust"), an open-end, series, management investment company. This Prospectus
sets forth basic information about the Trust and the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information ("SAI"), dated August 1,
1997 has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The SAI is available without charge upon
request to the Trust at the address or telephone number set forth above.
Shares of the Fund are offered at net asset value and currently are sold to
segregated asset accounts ("Variable Accounts") of ReliaStar Life Insurance
Company (formerly "Northwestern National Life Insurance Company"), Northern Life
Insurance Company ("Northern"), and ReliaStar Bankers Security Life Insurance
Company ("BSL") (collectively the "Affiliated Insurance Companies") to serve as
investment medium for variable annuity or variable life insurance contracts (the
"Variable Contracts") issued by the Affiliated Insurance Companies. The Variable
Accounts of ReliaStar Life Insurance Company ("ReliaStar"), Northern and BSL
invest in shares of one or more of the Funds in accordance with allocation
instructions received from Variable Contract Owners. Such allocation rights are
described further in the accompanying Prospectus for the Variable Account.
The Fund's investment objective is long-term capital appreciation. The Fund
will seek to achieve this objective by primarily investing in equity securities
of foreign issuers with market capitalizations greater than $1 billion.
THIS PROSPECTUS SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS OF THE
VARIABLE ACCOUNT, WHICH ACCOMPANIES THIS PROSPECTUS. BOTH PROSPECTUSES SHOULD BE
READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
Financial Highlights..............................................
Investment Programs............................................. 3
Investment Objectives and Policies.............................. 3
Risk Factors.................................................... 4
Other Investment Strategies and Techniques...................... 5
Performance Information......................................... 8
How Net Asset Value is Determined............................... 9
Management of the Fund.......................................... 10
Purchase of Shares.............................................. 12
Redemption of Shares............................................ 12
Dividends, Distributions and Taxes.............................. 13
General Information............................................. 14
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
STATE IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AT
ANY TIME SUBSEQUENT TO ITS DATE.
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INVESTMENT PROGRAMS
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Northstar Variable Trust (the "Trust") is a Massachusetts business trust
organized as an open-end, diversified, series, management investment company.
Currently the Trust offers five series comprising five separate investment
portfolios - Northstar International Value Fund, Northstar Growth Fund,
Northstar Income and Growth Fund, Northstar Multi-Sector Bond Fund, and
Northstar High Yield Bond Fund (the "Funds"). The Fund has its own investment
objective and investment policies as described below. The Trustees of the Trust
reserve the right to change any of the investment policies, strategies or
practices of the Fund, as described in this Prospectus and the SAI, without
shareholder approval, except in those instances where shareholder approval is
expressly required.
The investment objective of the Fund is a fundamental policy which may not
be changed without the approval of holders of a majority of the outstanding
shares of the Fund. There can, of course, be no assurance that the Fund will
achieve its investment objective since all investments are inherently subject to
market risks.
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
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The Fund's investment objective is long-term capital appreciation. The Fund
invests primarily in equity securities of foreign issuers with market
capitalizations greater than $1 billion. The Fund may invest up to 25% of its
total assets in small capitalization companies. Small capitalization companies
are those with capitalization of $1 billion or less. Investments in small
capitalization companies while generally providing greater growth potential than
investments in companies with larger capitalizations, also entail greater risks.
Small capitalization companies often have limited product lines, markets or
financial resources and may be dependent on one person or a few key persons for
management. The securities of such companies may be subject to more volatile
market movements than securities of larger, more established companies, both
because the securities typically are traded in lower volume and because the
issuers typically are more subject to changes in earnings and prospects. Because
the Fund applies a U.S. size standard on a global basis, it may invest in
issuers which might, in some countries, rank among the largest companies in
terms of capitalization.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of issuers located in at least three countries other
than the United States. Countries in which the Fund may invest include, but are
not limited to, the nations of Western Europe, North and South America,
Australia and Asia. Equity securities include common stocks, preferred stocks
and securities convertible into common stocks. It is anticipated that securities
generally will be purchased in the form of common stock, American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") or Global Depositary
Receipts ("GDRs"). ADRs, EDRs and GDRs, which may be sponsored or unsponsored,
are receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying foreign securities. The issuers of securities
underlying unsponsored ADRs, EDRs and GDRs are not obligated to disclose
material
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information in the United States and, accordingly, there may not be a
correlation between such information and the market value of the Depositary
Receipts.
The Fund may invest up to 25% of its assets in securities of companies
located in countries with emerging securities markets. Emerging markets are the
capital markets of any country that in the opinion of the Adviser is generally
considered a developing country by the international financial community. See
"Risk Factors -- Foreign Securities".
In seeking out foreign securities for purchase, the Adviser does not
attempt to match the security allocations of foreign stock market indices.
Therefore, the Fund's country weightings may differ significantly from country
weightings found in published foreign stock indices. For example, the Adviser
may choose not to invest the Fund's assets in a country whose stock market, at
any given time, may comprise a large portion of a published foreign stock market
index. At the same time, the Adviser may invest the Fund's assets in countries
whose representation in such an index may be small or non-existent. The Adviser
selects stocks for the Fund based on their individual merits and not necessarily
on their geographic locations.
RISK FACTORS
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The Fund's net asset value per share is expected to fluctuate. Investors
should consider the Fund as a supplement to an overall investment program and
should invest only if they are willing to undertake the risks involved.
EQUITY SECURITIES. Equity securities can over time rise and fall in value,
often based on factors unrelated to the value of the issuer of the securities,
and such fluctuations can be pronounced. Changes in the value of the Fund's
investments will result in changes in the value of the Fund's shares and thus
its total return to investors.
The securities of smaller companies in which the Fund may invest may be
subject to more abrupt or erratic market movements than larger more established
companies, because these securities typically are traded in lower volume and the
issuers typically are subject to a greater degree to changes in earnings and
prospects.
FOREIGN SECURITIES. Investing in foreign securities involves special risks.
These include currency fluctuations, political or economic instability in the
country of issue and the possible imposition of exchange controls or other laws
or restrictions. In addition, securities prices in foreign markets are generally
subject to different economic, financial, political and social factors than are
the prices of securities in U.S. markets. With respect to some foreign countries
there may be the possibility of expropriation or confiscatory taxation,
limitations on liquidity of securities or political or economic developments
which could affect the foreign investments of the Fund.
Further, securities of foreign issuers generally will not be registered
with the SEC, and such issuers will generally not be subject to the SEC's
reporting requirements. Accordingly, there is
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likely to be less publicly available information concerning certain of the
foreign issuers of securities held by the Fund than is available concerning U.S.
companies. Foreign companies are also generally not subject to uniform
accounting, auditing and financial reporting standards or to practices and
requirements comparable to those applicable to U.S. companies. There may also
be less government supervision and regulation of foreign broker-dealers,
financial institutions and listed companies than exists in the U.S. These
factors could make foreign investments, especially those in developing
countries, more volatile.
Investing in emerging securities markets involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
markets countries may have fixed or managed currencies that are not
free-floating against the U.S. dollar. Further, certain currencies may not be
traded internationally. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base, governmental controls and investment restrictions that are subject to
political change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries.
Emerging securities markets typically have substantially less volume than
U.S. markets, and securities in many of such markets are less liquid, and their
prices often are more volatile than securities of comparable U.S. companies.
Such markets often have different clearance and settlement procedures for
securities transactions, and in some markets there have been times when
settlements have been unable to keep pace with the volume of transactions,
making it difficult to conduct transactions. Delays in settlement could result
in temporary periods when assets which the Fund desires to invest in emerging
markets may be uninvested. Settlement problems in emerging markets countries
also could cause the Fund to miss attractive investment opportunities.
Satisfactory custodial services may not be available in some emerging markets
countries, which may result in the Fund incurring additional costs and delays in
the transportation and custody of such securities.
OTHER INVESTMENT STRATEGIES AND TECHNIQUES
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The Fund may, but does not currently intend to, engage in certain
additional investment techniques not described in the Prospectus. These
techniques and additional information on the securities and techniques described
in the Prospectus are contained in the Statement of Additional Information.
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SHORT-TERM INVESTMENTS. At times the Fund may invest in short-term cash
equivalent securities either for temporary, defensive purposes, or as part of
its overall investment strategy. These securities consist of high quality debt
obligations maturing in one year or less from the date of purchase, such as U.S.
Government securities, certificates of deposit, bankers' acceptances and
commercial paper. High quality means the obligations have been rated at least
A-1 by Standard & Poor's Corporation ("S&P") or Prime-1 by Moody's Investor's
Service, Inc. ("Moody's"), have an outstanding issue of debt securities rated at
least AA by S&P or Aa by Moody's, or are of comparable quality in the opinion of
the Subadviser.
REPURCHASE AGREEMENTS. Short-term investments also include repurchase
agreements with respect to the high quality debt obligations listed above. A
repurchase agreement is a transaction in which the Fund purchases a security
and, at the same time, the seller (normally a commercial bank or broker-dealer)
agrees to repurchase the same security (and/or a security substituted for it
under the repurchase agreement) at an agreed-upon price and date in the future.
The resale price is in excess of the purchase price in that it reflects an
agreed-upon market interest rate effective for the period of time during which
the Fund holds the securities. The majority of these transactions run from day
to day and not more than seven days from the original purchase. The Fund's risk
is limited to the ability of the seller to pay the agreed- upon sum on the
delivery date; in the event of bankruptcy or the default by the seller, there
may be possible delays and expenses in liquidating the instrument purchased,
decline in its value and loss of interest. The securities will be marked to
market every business day so that their value is at least equal to the amount
due from the seller, including accrued interest. The Subadviser will also
consider the creditworthiness of any bank or broker-dealer involved in
repurchase agreements under procedures adopted by the Board of Trustees.
WHEN-ISSUED SECURITIES. The Fund may purchase securities on a when-issued
or delayed-delivery basis, generally in connection with an underwriting or other
offering. When-issued and delayed-delivery transactions occur when securities
are bought with payment for and delivery of the securities scheduled to take
place at a future time, beyond normal settlement dates, generally from 15 to 45
days after the transaction. No interest accrues to the purchaser during the
period before delivery. There is a risk in these transactions that the value of
the securities at settlement may be more or less than the agreed upon price, or
that the party with which the Fund enters into such a transaction may not
perform its commitment. The Fund will segregate liquid assets, such as cash,
U.S. Government securities and other liquid, high quality debt securities in an
amount sufficient to meet its payment obligations with respect to these
transactions.
SECURITIES LENDING. The Fund may lend its securities in an amount not
exceeding 30% of its assets to financial institutions such as banks and brokers
if the loan is collateralized in accordance with applicable regulations. Under
the present regulatory requirements which govern loans of portfolio securities,
the loan collateral must, on each business day, at least equal the value of the
loaned securities and must consist of cash, letters of credit of domestic banks
or domestic branches of foreign banks, or securities of the U.S. Government.
Loans of securities involve risks of delay in receiving additional collateral or
in recovering the securities loaned or
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even loss of rights in the collateral should the borrower of the securities
fail financially. However, such securities lending will be made only when, in
the opinion of the Subadviser, the income to be earned from the loans justifies
the attendant risks. Loans are subject to termination at the option of the
Fund or the borrower.
OPTIONS. The Fund may write (sell) covered call options on individual
securities and on stock indices and engage in related closing transactions. A
covered call option on a security is an agreement by the Fund, in exchange for a
premium, to sell a particular portfolio security if the option is exercised at a
specified price before a set date. An option on a stock index gives the option
holder the right to receive, upon exercising the option, a cash settlement
amount based on the difference between the exercise price and the value of the
underlying stock index. Risks associated with writing covered options include
the possible inability to effect closing transactions at favorable prices and an
appreciation limit on the securities set aside for settlement. The Fund may also
purchase call options in closing transactions, to terminate option positions
written by the Fund. There is no assurance of liquidity in the secondary market
for purposes of closing out covered call option positions.
The Fund may purchase put and call options with respect to securities which
are eligible for purchase by the Fund and with respect to various stock indices
for the purpose of hedging against the risk of unfavorable price movements
adversely affecting the value of the Fund's securities or securities the Fund
intends to buy. A put option on a security is an agreement by the writer of the
option, in exchange for a premium, to purchase the security from the Fund, if
the option is exercised, at a specified price before a set date. The Fund may
also sell put and call options in closing transactions.
Special risks are associated with the use of options. There can be no
guarantee of a correlation between price movements in the option and in the
underlying securities or index. A lack of correlation could result in a loss on
both the Fund's portfolio holdings and the option so that the Fund's return
might have been better had the option not been purchased or sold. There can be
no assurance that a liquid market will exist at a time when the Fund seeks to
close out an option position. The Fund may purchase a put or call option only if
the value of its premium, when aggregated with the premiums on all other options
held by the Fund, does not exceed 5% of the Fund's total assets.
STOCK INDEX FUTURES. The Fund may buy and sell stock index futures
contracts for bona fide hedging purposes, e.g. in order to hedge against changes
in prices of the Fund's securities. No more than 25% of the Fund's assets will
be hedged.
A stock index futures contract is an agreement pursuant to which one party
agrees to deliver to the other an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of securities is made. If the Subadviser
expected general stock market prices to rise, it might purchase a stock index
futures contract as a hedge against an increase in prices of particular equity
securities it wanted ultimately to buy. If in fact the stock index did rise, the
price of the equity securities intended to be purchased might also
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increase, but that increase would be offset in part by the increase in the value
of the Fund's futures contract resulting from the increase in the index. On
the other hand, if the Subadviser expected general stock market prices to
decline, it might sell a futures contract on the index. If that index did in
fact decline, the value of some or all of the equity securities held by the
Fund might also be expected to decline, but that decrease would be offset in
part by the increase in the value of the futures contract.
There is no assurance that it will be possible at any particular time to
close a futures position. In the event that the Fund could not close a futures
position and the value of the position declined, the Fund would be required to
continue to make daily cash payments to the other party to the contract to
offset the decline in value of the position. There can be no assurance that
hedging transactions will be successful, as there may be an imperfect
correlation between movements in the prices of the futures contracts and of the
securities being hedged, or price distortions due to market conditions in the
futures markets. Successful use of futures contracts is subject to the
Subadviser's ability to predict correctly movements in the direction of interest
rates, market prices and other factors affecting the value of securities.
ILLIQUID AND RESTRICTED SECURITIES; SHORT SALES AGAINST THE BOX. The Fund
may invest up to 5% of its net assets in illiquid securities, including (i)
securities for which there is no readily available market; (ii) securities which
may be subject to legal restrictions on resale (so-called "restricted
securities") other than Rule 144A securities noted below; (iii) repurchase
agreements having more than seven days to maturity; and (iv) fixed time deposits
subject to withdrawal penalties (other than those with a term of less than seven
days). Illiquid securities do not include those which meet the requirements of
Securities Act Rule 144A and which the Subadviser has determined to be liquid
based on guidelines approved by the Board of Trustees. The Fund is also
permitted to engage in short sales "against the box." Such short sales are a
method of locking in unrealized capital gains without current recognition of
such gains.
PERFORMANCE INFORMATION
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The Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. Performance
information for the Fund will not be advertised or included in sales literature
unless accompanied by comparable performance information for a separate account
to which the Fund offers its shares. Both yield and total return figures are
computed in accordance with formulas specified by the SEC and are based on
historical earnings and are not intended to indicate future performance. The
yield for the Fund will be computed by dividing (a) net investment income over a
30-day period by (b) an average value of invested assets (using the average
number of shares entitled to receive dividends at the end of the period), all in
accordance with applicable regulatory requirements. Such amounts will be
compounded for six months and then annualized for a twelve-month period to
derive the yield of the Fund.
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Standardized quotations of average annual total return for the Fund's
shares will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment over a period of 1, 5, and 10 years (or up
to the life of the Fund). Standardized total return quotations reflect the
deduction of a proportional share of expenses (on an annual basis) of a Fund,
and assume that all dividends and distributions are reinvested when paid. The
Fund also may quote supplementally a rate of total return over different periods
of time or by nonstandardized means. In addition, the Fund may from time to time
publish materials citing historical volatility for shares of the Fund.
Volatility is the standard deviation of day to day logarithmic price changes
expressed as an annualized percentage.
Performance information for the Fund may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Composite Stock Index
("S&P 500"), Dow Jones Industrial Average ("DJIA"), or other unmanaged indices
so that Contract Owners may compare the Fund's results with those of a group of
unmanaged securities widely regarded by Lipper Analytical Services, Inc., a
widely used independent research firm which ranks mutual funds by overall
performance, investment objective, and assets, or tracked by other services,
companies, publications, or persons who rank mutual funds by overall performance
or other criteria; (iii) the Consumer Price Index (measure for inflation) to
assess the real rate of return from an investment in the Fund; and (iv) well
known monitoring sources of bank certificates of deposit performance rates such
as Salomon Brothers, FEDERAL RESERVE BULLETIN, AMERICAN BANKER, Tower Data, and
the THE WALL STREET JOURNAL. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs and expenses.
Quotations of yield or total return for the Fund will not take into account
charges or deductions against any separate account to which the Fund's shares
are sold or charges and deductions against the Variable Contracts issued by the
Affiliated Insurance Companies. The Fund's yield and total return should not be
compared with mutual funds that sell their shares directly to the public since
the figures provided do not reflect charges against the Variable Account or the
Variable Contracts. Performance information for the Fund reflects only the
performance of a hypothetical investment in the Fund during the particular time
period on which the calculations are based. Performance information should be
considered in light of the Fund's investment objective and policies,
characteristics and qualities of the portfolio, and the market conditions during
the given time period, and should not be considered as a representation of what
may be achieved in the future. For a description of the methods used to
determine total return for the Fund, see the Statement of Additional
Information.
HOW NET ASSET VALUE IS DETERMINED
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The net asset value per share of the Fund is determined at the close of the
general trading session (normally 4:00 p.m.) of the New York Stock Exchange (the
"Exchange") on each business day the Exchange is open. The net asset value of
the Fund is computed by dividing the value of the Fund's securities, plus any
cash and other assets (including dividends and interest accrued but not
collected) less all liabilities (including accrued expenses) by the number of
outstanding shares of the Fund.
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Generally, trading in foreign securities, money market instruments and
repurchase agreements is substantially completed each day at various times prior
to the close of the general trading session of the Exchange. The values of such
securities used in computing the net asset value of the Fund are determined as
of such times. Occasionally, events affecting the value of such securities may
occur between such times and such closing which will not be reflected in the
computation of the Fund's net asset value. If events occur which materially
affect the value of such securities, the securities will be valued at fair
market value as determined in good faith by the Trustees.
MANAGEMENT OF THE FUND
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THE TRUSTEES. The Trustees of the Trust (the "Trustees") oversee the
operations of the Trust and the Fund and perform the various duties imposed on
trustees by the laws of the Commonwealth of Massachusetts and the Investment
Company Act of 1940 (the "1940 Act"). The Trustees meet quarterly to review the
Fund's investment policies, performance, expenses, and other business affairs
and elect officers of the Trust annually. The Trustees delegate day to day
management of the Fund to the officers of the Trust.
THE ADVISER AND AFFILIATED SERVICE PROVIDERS. Pursuant to an Investment
Advisory Agreement with the Trust, Northstar Investment Management Corporation
acts as the investment adviser to the Fund. In this capacity, the Adviser
maintains the overall responsibility of overseeing the investment management
provided by the subadviser. Northstar Administrators Corporation, an
affiliate of the Adviser, furnishes certain administrative, compliance and
accounting services to the Fund, Employees of the Adviser and Administrator
serve as officers of the Fund, and the Adviser provides office space for the
Fund and pays the salaries of all Fund officers and Trustees who are affiliated
with the Adviser.
The Adviser and its affiliates are indirect, majority owned subsidiaries of
ReliaStar Financial Corporation ("ReliaStar"). ReliaStar's address is 20
Washington Avenue South, Minneapolis, Minnesota 55401. Combined minority
interests held by members of senior management currently equal 20%. ReliaStar is
a publicly traded holding company whose subsidiaries specialize in the life and
health insurance business. Through the Affiliated Insurance Companies and other
subsidiaries, ReliaStar issues and distributes individual life insurance,
annuities and mutual funds, group life and health insurance and life and health
reinsurance, and provides related investment management services.
The Adviser's fee is accrued daily against the value of the Fund's net
assets and is payable by the Fund monthly at the annual rate of 1.00% of the
Fund's average daily net assets. The Administrator's fee is accrued daily
against the value of the Fund's net assets and is payable monthly at an annual
rate of 0.10% of the Fund's average daily net assets. The Adviser, Administrator
and Subadviser have agreed to waive fees until the assets of the Fund exceed $50
million.
PORTFOLIO MANAGERS. Charles Brandes, who has over 29 years of investment
management experience, founded the general partner of Brandes Investment
Partners, L.P. in 1974 and owns a controlling interest in it. At Brandes
Investment Partners, L.P., he serves as a Managing Partner and senior member of
the investment committee.
Mr. Brandes earned his BA in Economics from Bucknell University. He is a
Chartered Financial Analyst and a member of the Association for Investment
Management and Research.
Jeffrey Busby, who has over 11 years of investment management experience,
serves as a Managing Partner and senior member of the investment committee at
Brandes Investment Partners, L.P. He is also responsible for overseeing all
trading activities for the firm.
Mr. Busby earned his BS in Chemical Engineering from Northwestern
University and his MBA in Finance from the University of California, Berkeley.
He is a Chartered Financial Analyst and a member of the Association of
Investment Management and Research and the Financial Analysts Society.
Mr. Brandes and Mr. Busby have served as co-portfolio managers of the Fund
since inception in July 1997. They structure the portfolio from a buy list
determined by their firm's investment committee, of which they are senior
members.
SUBADVISER. Brandes Investment Partners, L.P. ("Brandes"), a registered
investment adviser, serves as sub-adviser to the Fund pursuant to a Subadvisory
Agreement dated July 24, 1997 between the Adviser and Brandes. The company was
formed in May 1996 as the successor to its general partner, Brandes Investment
Partners, Inc. Brandes' principal address is 12750 High Bluff Drive, San Diego,
California 92130. Brandes currently manages in excess of $10 billion for
international and global portfolios. After the Fund's assets exceed $50 million,
Brandes will receive from Northstar, not the Fund, a monthly fee for its
services at an annual rate equal to 50% of the management fee that the Fund pays
Northstar. The Adviser is responsible for overseeing the investment management
provided by Brandes, and assumes all cost and expenses of the subadvisory
arrangement.
10
<PAGE>
The Subadviser places all orders for the purchase and sale of portfolio
securities. In selecting brokers, the Subadviser may consider research and
brokerage services furnished to it. The Subadviser also advises other
accounts that
may purchase and hold securities in which the Fund may invest and certain
persons affiliated with the Adviser may purchase and hold, directly and
indirectly, securities in which the Fund or other accounts invest, subject to
internal guidelines regarding conflicts of interest.
CUSTODIAN AND ACCOUNTING SERVICES AGENT. The Fund's custodian and fund
accounting services agent is State Street Bank and Trust Company, located at 225
Franklin Street, Boston, Massachusetts 02110.
11
<PAGE>
PURCHASE OF SHARES
------------------------------------------------------------------------------
As of the date of this Prospectus, shares of the Fund are offered only for
purchase by the Variable Accounts to serve as an investment medium for the
Variable Contracts issued by the Affiliated Insurance Companies. Shares of the
Fund may be offered in the future to other separate accounts established by one
or more of the Affiliated Insurance Companies or sold to separate accounts of
other affiliated or unaffiliated insurance companies.
Shares of the Fund are sold at net asset value (without a sales charge)
next computed after receipt of a purchase order.
The Fund may be used independently or in combination with other Funds. To
the extent that shares of the Fund are sold to the Variable Accounts as the
investment medium for a Variable Contract, the structure of the Fund permits
Variable Contract Owners, within the limitations described in their Contracts,
to allocate their accumulated value in the Contracts in response to or in
anticipation of changes in market conditions. The assets of the Fund are
segregated, and a Variable Contract Owner's interest is limited to the Fund in
which the Contract's accumulated value is allocated.
The Trust reserves the right to discontinue offering shares of the Fund at
any time. In the event that the Fund ceases offering its shares, any investments
allocated by an insurance company investing in the Trust to the Fund will,
subject to any necessary regulatory approvals, be invested in the Fund deemed
appropriate by the Trustees.
Shares of the Fund may be exchanged for shares of any of the other Funds,
all of which are described in the Prospectus for the Northstar Variable Trust.
Exchanges are treated as a redemption of shares of one Fund and a purchase of
shares of one or more of the other Funds and are effected at the respective net
asset value per share of each series on the date of the exchange. The Trust
reserves the right to modify or discontinue its exchange privilege at any time
without notice.
Variable Contract Owners do not deal directly with the Trust to purchase,
redeem, or exchange shares of the Fund, and Variable Contract Owners should
refer to the prospectus for the Variable Account for information on the
allocation of premiums and on transfers of accumulated value among sub-accounts
of the Variable Account.
REDEMPTION OF SHARES
------------------------------------------------------------------------------
Shares of the Fund may be redeemed on any business day. Redemptions are
effected at the per share net asset value next determined after receipt of the
redemption request. Redemption proceeds normally will be paid within seven days
following receipt of instructions in proper form. The right of redemption may be
suspended by the Trust or the payment date postponed beyond seven days when the
New York Stock Exchange is closed (other than customary weekend and holiday
closing) or for any period during which trading thereon is restricted
12
<PAGE>
because an emergency exists, as determined by the Securities and Exchange
Commission, making disposal of portfolio securities or valuation of net assets
not reasonably practicable, and whenever the Securities and Exchange Commission
has by order permitted such suspension or postponement for the protection of
shareholders. If the Board of Trustees should determine that it would be
determine that it would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment wholly or partly in cash, the Fund may
pay the redemption price in whole or part by a distribution in kind of
securities from the portfolio of the Fund in lieu of cash, in conformity with
applicable rules of the Securities and Exchange Commission. If shares are
redeemed in kind, the redeeming shareholder might incur brokerage costs in
converting the assets into cash.
DIVIDENDS, DISTRIBUTIONS AND TAXES
------------------------------------------------------------------------------
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code ("Code"). Accordingly, a Fund so
qualifying generally will not be subject to federal income taxes to the extent
that it distributes on a timely basis its investment company taxable income and
its net capital gains. Such income and capital gains distributions are
automatically reinvested in additional shares of the Fund, unless the
shareholder elects to receive cash.
Distributions of any investment company taxable income (which includes
among other items, dividends, interest, and any net realized short-term capital
gains in excess of net realized long-term capital losses) are treated as
ordinary income for tax purposes in the hands of the shareholder (Variable
Account). Net capital gains (the excess of any net long-term capital gains over
net short-term capital losses) will, to the extent distributed and classified by
the Fund as capital gain distributions, be treated as long-term capital gains in
the hands of the Variable Account regardless of the length of time the Variable
Account may have held the shares. Income distributions from any net investment
income of the Fund will be declared and paid annually.
Capital gain distributions, if any, will be paid at least once annually.
To comply with regulations under Section 817(h) of the Code, the Fund is
required to diversify its investments. Generally, the Fund will be required to
diversify its investments so that on the last day of each quarter of a calendar
year no more than 55% of the value of its total assets is represented by any one
investment, no more than 70% is represented by any two investments, no more than
80% is represented by any three investments, and no more than 90% is represented
by any four investments. For this purpose, securities of a given issuer
generally are treated as one investment, but each U.S. Government agency and
instrumentality is treated as a separate issuer. Any security issued,
guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. or
any agency or instrumentality of the U.S. is treated as a security issued by the
U.S. Government or its agency or instrumentality, whichever is applicable.
Compliance with the diversification rules under Section 817(h) of the Code
generally will limit the ability of the Fund to invest greater than 55% of its
total assets in direct obligations of
13
<PAGE>
the U.S. Treasury (or any other issuer) or to invest primarily in securities
issued by a single agency or instrumentality of the U.S.
Government.
The Treasury Department announced that it would issue future regulations or
rulings addressing the circumstances in which a variable contract owner's
control of the investments of the separate account may cause the Contract Owner,
rather than the insurance company, to be treated as the owner of the assets held
by the separate account. If the Contract Owner is considered the owner of the
securities underlying the separate account, income and gains produced by those
securities would be included currently in the Contract Owner's gross income. It
is not known what standard will be set forth in the regulations or rulings.
In the event that rules or regulations are adopted, there can be no
assurance that the Fund will be able to operate as currently described in the
Prospectus, or that the Trust will not have to change the Fund's investment
objective or policies. While the Fund's investment objective is fundamental and
may be changed only by a vote of a majority of its outstanding shares, the
Trustees have reserved the right to modify the investment policies of the Fund
as necessary to prevent any such prospective rules and regulation from causing
the contract owners to be considered the owners of the shares of the Fund
underlying the Variable Accounts.
Reference is made to the Prospectus for the respective Variable Accounts
and Variable Contracts for information regarding the federal income tax
treatment of distributions to the Variable Accounts. See "Federal Income Tax
Status" in the Fund's Statement of Additional Information for more information
on taxes.
GENERAL INFORMATION
-----------------------------------------------------------------------------
ORGANIZATION OF THE FUND. The Trust was organized under Massachusetts law
in 1993 as a business trust. The Declaration of Trust provides that the Trustees
are authorized to create an unlimited number of series. All shares have equal
voting rights, except that only shares of the respective series are entitled to
vote on matters concerning only that series. Each share of the Fund will be
given one vote, unless a different allocation of voting rights is required under
applicable law for a mutual fund that in an investment medium for variable
insurance products. At the date of this Prospectus, there are five existing
series of the Trust (i.e. the "Funds").
In accordance with current laws, it is anticipated that an insurance
company issuing a variable contract that participates in the Trust will request
voting instructions from contract owners and will vote shares or other voting
interests in the separate account in proportion to the voting instructions
received. The Affiliated Insurance Companies and the Variable Accounts are
currently the only shareholders in the Trust, although other separate accounts
of the Affiliated Insurance Companies or other insurance companies may become
shareholders in the future.
The shares of the Fund, when issued, will be fully paid and non-assessable,
have no preference, preemptive, or similar rights, and will be freely
transferable. There will normally be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as
14
<PAGE>
less than a majority of the Trustees holding office have been elected by
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of the Trustees. Shareholders may, in
accordance with the Declaration of Trust, cause a meeting of shareholders to be
held for the purpose of voting on the removal of Trustees. Meetings of the
shareholders will be called upon written request of shareholders holding in the
aggregate not less than 10% of the outstanding shares having voting rights.
Except as set forth above and subject to the 1940 Act, the Trustees will
continue to hold office and appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims liability of the shareholders, Trustees,
officers, employees or agents of the Trust in connection with the Trust's
property or the affairs of the Trust, and requires that notice of the disclaimer
be given in each contract of obligation entered into or executed by the Trust or
its Trustees, officers, employees, or agents. The Declaration of Trust provides
for indemnification out of Trust property for all loss and expense of any
shareholder held personally liable by reason of being or having been a
shareholder of the Trust. The risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which the Trust
itself would be unable to meet its obligations, and thus should be considered
remote.
REGISTRATION STATEMENT. This Prospectus does not contain all the
information included in the Registration Statement filed with the Securities and
Exchange Commission under the 1933 Act and the 1940 Act, with respect to the
securities offered hereby, certain portions of which have been omitted pursuant
to the rules and regulations of the Securities and Exchange Commission. The
Registration Statement, including the exhibits filed therewith, may be examined
at the office of the Securities and Exchange Commission in Washington, D.C.
15
<PAGE>
August 1, 1997
STATEMENT OF ADDITIONAL INFORMATION
NORTHSTAR INTERNATIONAL VALUE FUND
(A Series of the Northstar Variable Trust)
TWO PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
(203) 863-6200 (800) 595-7827
Northstar Variable Trust, (the "Trust") is an open-end series management
investment company organized as a Massachusetts business trust. The Trust
consists of five separate series (each a "Fund"), each of which represents
shares of beneficial interest in a separate portfolio of securities and other
assets with its own objective and policies. Each Fund is managed separately by
Northstar Investment Management Corporation, the Fund's Adviser. Shares of the
Trust are issued and redeemed in conjunction with investments in and payments
under variable annuity and variable life contracts. Shares of the Trust are
currently offered to separate accounts ("Variable Accounts") of Reliastar Life
Insurance Company (formerly "Northwestern National Life Insurance Company"),
Northern Life Insurance Company and ReliaStar Bankers Security Life Insurance
Company (the "Affiliated Insurance Companies"). The Variable Accounts of the
Affiliated Insurance Companies invest in shares of one or more of the Funds in
accordance with allocation instructions received from Variable Contract Owners.
Such allocation rights are described further in the Prospectus for the Variable
Account. A summary of the Northstar International Value Fund which is a series
of the Trust (the "Fund") is set forth herein and in the Prospectus for the
Fund. This document is not the Prospectus of the Fund but is incorporated
therein by reference and should be read in conjunction with the Prospectus dated
August 1, 1997. Copies of the Prospectus may be obtained upon request and
without charge by contacting the Trust at the address or phone number above.
CONTENTS PAGE
Investment Objectives and Policies 2
Investment Restrictions 4
Other Investment Techniques 6
Portfolio Transactions and Brokerage Allocation 14
Portfolio Turnover 16
Services of the Adviser and Administrator 17
Services of the Subadviser 18
Net Asset Value 19
Purchases, Redemptions and Exchange Transactions 19
Dividends and Distributions 20
Federal Income Tax Status 20
Trustees and Officers 22
Other Information 24
Performance Information 25
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Northstar International Value Fund (the "Fund") is a diversified investment
portfolio comprising a series of the Northstar Variable Trust (the "Trust"),
an open-end series management investment company. The investment objective
of the Fund, set forth below, is a fundamental policy which may not be changed
without the approval of the holders of a majority of the outstanding shares of
the Fund. There can be no assurance that the Fund will achieve its stated
investment objective. (See "Risk Factors" in the current Prospectus.) In
general, the assets of the Fund are kept fully invested in securities selected
to meet the investment objective of the Fund; however, for temporary defensive
purposes, any part of the Fund's assets may be held from time to time in cash
or cash equivalents. At such times when the Fund's assets are invested for
temporary defensive purposes, the Fund will not be investing in accordance
with its investment objective.
The Fund has an investment objective of seeking long-term capital
appreciation by investing primarily in equity securities of foreign issuers
with market capitalizations greater than $1 billion. The Fund may invest up to
25% of its total assets in small capitalization companies. Small capitalization
companies are those with capitalization of $1 billion or less. Under normal
circumstances, the Fund will invest at least 65% of its total assets in equity
securities of issuers located in at least three countries other than the United
States. Countries in which the Fund may invest include, but are not limited to,
the nations of Western Europe, North and South America, Australia and Asia.
Equity securities include common stocks, preferred stocks and securities
convertible into common stocks. It is anticipated that securities generally
will be purchased in the form of common stock, American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") or Global Depositary Receipts
("GDRs"). ADRs, EDRs and GDRs, which may be sponsored or unsponsored, are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of the underlying foreign securities. The Fund may invest up to 25% of its
assets in securities of companies located in countries with emerging securities
markets. Emerging markets are the capital markets of any country that in the
opinion of the Adviser is generally considered a developing country by the
international financial community. See "Risk Factors--Foreign Securities" in
the current Prospectus.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies and cannot be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities (defined in the 1940 Act as the lesser of (a) more
than 50% of the outstanding shares or (b) 67% or more of the shares represented
at a meeting at which more than 50% of the outstanding shares are represented).
All other investment policies or practices are considered by the Fund to be
non-fundamental and accordingly may be changed without shareholder approval. If
a percentage restriction on investment or use of assets set forth below is
adhered to at the time a transaction is effected, later changes in percentage
resulting from changing market values will not be considered a deviation from
this policy.
1. Issue senior securities, except to the extent permitted under the
Investment Company Act of 1940, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 10% of
its total assets (not including the amount borrowed), provided that it will not
make investments while borrowings in excess of 5% of the value of its total
assets are outstanding;
2. Act as underwriter (except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities in its
investment portfolio);
3. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities), except that the Fund reserves the right to invest all of
its assets in shares of another investment company;
4. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although the Fund may purchase and sell securities which
are secured by real estate, securities of companies which invest or deal in real
estate and securities issued by real estate investment trusts);
5. Purchase or sell commodities or commodity futures contracts, except
that the Fund may purchase and sell stock index futures contracts for hedging
purposes to the extent permitted under applicable federal and state laws and
regulations and except that the Fund may engage in foreign exchange forward
contracts;
6. Make loans (except for purchases of debt securities consistent with the
investment policies of the Fund and except for repurchase agreements);
7. Make short sales of securities or maintain a short position, except for
short sales against the box;
8. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions;
9. Write put or call options, except that the Fund may (i) write covered
call options on individual securities and on stock indices; (ii) purchase put
and call options on securities which are eligible for purchase by the Fund and
on stock indices; and (iii) engage in closing transactions with respect to its
<PAGE>
options writing and purchases, in all cases subject to applicable federal and
state laws and regulations;
10. Purchase any security if as a result the Fund would then hold more
than 10% of any class of voting securities of an issuer (taking all common stock
issues as a single class, all preferred stock issues as a single class, and all
debt issues as a single class), except that the Fund reserves the right to
invest all of its assets in a class of voting securities of another investment
company;
11. Invest more than 10% of its assets in the securities of other
investment companies or purchase more than 3% of any other investment company's
voting securities or make any other investment in other investment companies
except as permitted by federal and state law, except that the Fund reserves the
right to invest all of its assets in another investment company;
12. Invest more than 15% of its net assets in illiquid securities.
INVESTMENT TECHNIQUES
- ------------------------------------------------------------------------------
Derivative Instruments. The Fund may invest in Derivative Instruments for
a variety of reasons, including to hedge certain market risks, to provide a
substitute for purchasing or selling particular securities or to increase
potential income gain. Derivatives may provide a cheaper, quicker or more
specifically focused way for the Fund to invest than "traditional" securities
would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit a Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., margin requirements) operated by
the clearing agency in order to reduce overall credit risk. As a result, unless
the clearing agency defaults, there is relatively little counterparty credit
risk associated with Derivatives purchased on an exchange. By contrast, no
clearing agency guarantees over-the-counter Derivatives. Therefore, each party
to an over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, Northstar and the Subadviser will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Fund. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
<PAGE>
Futures Transactions - In General. The Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London International
Financial Futures Exchange and the Sydney Futures Exchange Limited. Foreign
markets may offer advantages such as trading opportunities or arbitrage
possibilities not available in the United States. Foreign markets, however, may
have greater risk potential than domestic markets. For example, some foreign
exchanges are principal markets so that no common clearing facility exists and
an investor may look only to the broker for performance of the contract. In
addition, any profits that the Fund might realize in trading could be eliminated
by adverse changes in the exchange rate, or the Fund could incur losses as a
result of those changes. Transactions on foreign exchanges may include both
commodities which are traded on domestic exchanges and those which are not.
Unlike trading on domestic commodity exchanges, trading on foreign commodity
exchanges is not regulated by the Commodity Futures Trading Commission.
Engaging in these transactions involves risk of loss to the Fund which
could adversely affect the value of the Fund's net assets. Although the Fund
intends to purchase or sell futures contracts only if there is an active market
for such contracts, no assurance can be given that a liquid market will exist
for any particular contract at any particular time. Many futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Fund to substantial losses. In the
case of dramatically rising or falling markets, the loss from investing
in futures is potentially unlimited.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant market,
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if the Fund uses
futures to hedge against the possibility of a decline in the market value of
securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, the Fund may be required to segregate cash or high quality
money market instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting the Fund's ability otherwise to
invest those assets.
Specific Futures Transactions. The Fund may purchase and sell stock index
futures contracts. A stock index future obligates the Fund to pay or receive an
amount of cash equal to a fixed dollar amount specified in the futures contract
<PAGE>
multiplied by the difference between the settlement price of the contract on the
contract's last trading day and the value of the index based on the stock prices
of the securities that comprise it at the opening of trading in such securities
on the next business day.
The Fund will engage in futures transactions only as a hedge against the
risk of unexpected changes in the values of securities held or intended to be
held by the Fund. As a general rule, the Fund will not purchase or sell futures
if, immediately thereafter, more than 25% of its net assets would be hedged. In
addition, the Fund will not purchase or sell futures or related options if,
immediately thereafter, the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for such options would exceed 5% of
the market value of the Fund's net assets.
Options - In General. The Fund may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period.
A covered call option written by the Fund is a call option with respect to
which the Fund owns the underlying security or otherwise covers the transaction
by segregating cash or other securities. A put option written by the Fund is
covered when, among other things, cash or liquid securities having a value equal
to or greater than the exercise price of the option are placed in a segregated
account with the Fund's custodian to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize, through
the receipt of premiums, a greater return than would be realized on the
underlying securities alone. The Fund receives a premium from writing covered
call or put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
<PAGE>
Specific Options Transactions. The Fund may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of specific
securities) or stock indices listed on national securities exchanges or traded
in the over-the-counter market. An option on a stock index is similar to an
option in respect of specific securities, except that settlement does not occur
by delivery of the securities comprising the index. Instead, the option holder
receives an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. Thus, the effectiveness of
purchasing or writing stock index options will depend upon price movements in
the level of the index rather than the price of a particular stock.
The Fund may purchase and sell call and put options on foreign currency.
These options convey the right to buy or sell the underlying currency at a price
which is expected to be lower or higher than the spot price of the currency at
the time the option is exercised or expires.
The Fund may purchase cash-settlement options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps in
pursuit of its investment objective. Interest rate swaps involve the exchange by
the Fund with another party of their respective commitments to pay or receive
interest (for example, an exchange of floating-rate payments for fixed-rate
payments) denominated in U.S. dollars or foreign currency. Equity index swaps
involve the exchange by the Fund with another party of cash flows based upon the
performance of an index or a portion of an index of securities which usually
includes dividends. A cash-settled option on a swap gives the purchaser the
right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated transactions
from financial institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability of
Northstar and the Subadviser to predict correctly movements in the prices of
individual stocks, the stock market generally, foreign currencies or interest
rates. To the extent the Manager's predictions are incorrect, the Fund may incur
losses.
SHORT SALES. The Fund may make short sales "against the box." A short-sale
is a transaction in which a party sells a security it does not own in
anticipation of decline in the market value of that security. A short sale is
"against the box" to the extent that the Fund contemporaneously owns or has the
right to obtain securities identical to those sold short. When the Fund makes a
short sale, it must borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Fund may
have to pay a fee to borrow particular securities, and is often obligated to pay
over any accrued interest on such borrowed securities.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a
Fund buys a money market instrument and obtains a simultaneous commitment from
the seller to repurchase the instrument at a specified time and at an agreed
upon yield. Northstar will use standards set by the Fund's Trustees in reviewing
the creditworthiness of parties to repurchase agreements with the Fund. In
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addition, no more than an aggregate of 15% of the Fund's net assets, at the time
of investment, will be invested in illiquid investments, including repurchase
agreements having maturities longer than seven days. In the event of failure of
the executing bank or broker-dealer, the Fund could experience some delay in
obtaining direct ownership of the underlying collateral and might incur a loss
if the value of the security should decline, as well as costs in disposing of
the security.
LENDING PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
broker-dealers and other financial institutions in an amount up to 30% of the
value of its total assets, provided that such loans are callable at any time by
the Fund and are at all times secured by collateral held by the Fund at least
equal to the market value, determined daily, of the loaned securities. The Fund
will continue to receive any income on the loaned securities, while
simultaneously earning interest on cash collateral (which will be invested in
short-term debt obligations) or a securities lending fee (in the case of
collateral in the form of U.S. Government Securities).
There may be risks of delay in recovery of the loaned securities and, in
some cases, loss of rights in the collateral should the borrower of the
securities fail financially. Loans of portfolio securities will only be made to
firms considered by Northstar to be creditworthy under guidelines adopted by the
Trustees.
WHEN-ISSUED SECURITIES. The Fund may purchase securities on a when-issued
or delayed delivery basis. In such transactions, the price is fixed at the time
the commitment to purchase is made, but delivery and payment for the securities
take place at a later date, normally within one month. The value of the security
on the settlement date may be more or less than the price paid as a result of,
among other things, changes in the level of interest rates or other market
factors. Accordingly, there is a risk of loss, which is in addition to the risk
of decline in the value of the Fund's other assets. The Fund will establish a
segregated account with its custodian in which it will maintain cash and
marketable securities equal in value to commitments for when-issued or delayed
delivery securities. While when-issued or delayed delivery securities may be
sold prior to the settlement date, it is intended that the Fund will purchase
such securities with the purpose of actually acquiring them, unless a sale
appears desirable for investment reasons.
Risks of International Investing
Investments in foreign securities involve special risks, including
currency fluctuations, political or economic instability in the country of issue
and the possible imposition of exchange controls or other laws or restrictions.
In addition, securities prices in foreign markets are generally subject to
different economic, financial, political and social factors than are the prices
of securities in U.S. markets. With respect to some foreign countries there may
be the possibility of expropriation or confiscatory taxation, limitations on
liquidity of securities of political or economic developments which could affect
the foreign investments of the Fund. Moreover, securities of foreign issuers
generally will not be registered with the SEC, and such issuers will generally
not be subject to the SEC's reporting requirements. Accordingly, there is likely
to be less publicly available information concerning certain of the foreign
issuers of securities held by the Fund than is available concerning U.S.
companies. Foreign companies are also generally not subject to uniform
accounting, auditing and financial reporting standards or to practices and
requirements comparable to those applicable to U.S. companies. There may also be
less government supervision and regulation of foreign broker-dealers, financial
institutions and listed companies than exists in the U.S. These factors could
make foreign investments, especially those in developing countries, more
volatile. All of the above issues should be considered before investing in the
Fund.
Emerging Markets and Related Risks
The Fund may invest up to 25% of its assets in securities of companies
located in countries with emerging securities markets. Emerging markets are the
capital markets of any country that in the opinion of the Adviser is generally
considered a developing country by the international financial community.
Currently, these markets include, but are not limited to, the markets of
Argentina, Brazil, Chile, China, Colombia, Czech Republic, Greece, Hungary,
India, Indonesia, Israel, Korea, Malaysia, Mexico, Pakistan, Peru, the
Philippines, Poland, Portugal, Slovak Republic, Sri Lanka, Taiwan, Thailand,
Turkey, Venezuela and countries that comprise the former Soviet Union. As
opportunities to invest in other emerging markets countries develop, the Fund
expects to expand and diversify further the countries in which it invests.
Investing in emerging market securities involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
markets countries may have fixed or managed currencies that are not
free-floating against the U.S. dollar. Further, certain currencies may not be
traded internationally. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base, governmental controls and investment restrictions that are subject to
political change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries.
Emerging securities markets typically have substantially less volume
than U.S. markets, securities in many of such markets are less liquid, and their
prices often are more volatile than securities of comparable U.S. companies.
Such markets often have different clearance and settlement procedures for
securities transactions, and in some markets there have been times when
settlements have been unable to keep pace with the volume of transactions,
making it difficult to conduct transactions. Delays in settlement could result
in temporary periods when assets which the Fund desires to invest in emerging
markets may be uninvested. Settlement problems in emerging markets countries
also could cause the Fund to miss attractive investment opportunities.
Satisfactory custodial services may not be available in some emerging markets
countries, which may result in the Fund incurring additional costs and delays in
the transportation and custody of such securities.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION. The Adviser and the Subadviser
place orders for the purchase and sale of securities, supervise their execution
and negotiate brokerage commissions on behalf of the Fund. For purposes of this
section, discussion of the Adviser includes the Subadviser. It is the practice
of the Adviser to seek the best prices and best execution of orders and to
negotiate brokerage commissions which in the Adviser's opinion are reasonable
in relation to the value of the brokerage services provided by the executing
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broker. Brokers who have executed orders for the Funds are asked to quote a fair
commission for their services. If the execution is satisfactory and if the
requested rate approximates rates currently being quoted by the other brokers
selected by the Adviser, the rate is deemed by the Adviser to be reasonable.
Brokers may ask for higher rates of commission if all or a portion of the
securities involved in the transaction are positioned by the broker, if the
broker believes it has brought the Fund an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value, and payment of such commissions is authorized by the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that the Fund benefits with a securities industry comprised of many
and diverse firms and that the long-term interest of shareholders of the Fund
is best served by its brokerage policies which include paying a fair commission
rather than seeking to exploit its leverage to force the lowest possible
commission rate. The primary factors considered in determining the firms to
which brokerage orders are given are the Adviser's appraisal of the firm's
ability to execute the order in the desired manner, the value of research
services provided by the firm, and the firm's attitude toward and interest in
mutual funds in general, including the sale of mutual funds managed and
sponsored by the Adviser. The Adviser does not offer or promise to any broker
an amount or percentage of brokerage commissions as an inducement or reward for
the sale of shares of the Fund. Over-the-counter purchases and sales are
transacted directly with principal market-makers except in those circumstances
where in the opinion of the Adviser better prices and execution are available
elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political developments; many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Fund and its shareholders.
Purchases and sales of fixed-income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to
dealers serving as market makers for the
15
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securities at a net price. The Fund will also purchase such securities in
underwritten offerings and will, on occasion, purchase securities directly from
the issuer. Generally, fixed-income securities are traded on a net basis and do
not involve brokerage commissions. The cost of executing fixed-income
securities transactions consists primarily of dealer spreads and underwriting
commissions.
In purchasing and selling fixed-income securities, it is the policy of the Fund
to obtain the best results taking into account the dealer's general execution
and operational facilities, the type of transaction involved and other factors,
such as the dealer's risk in positioning the securities involved. While the
Adviser generally seeks reasonably competitive spreads or commissions, the Fund
will not necessarily pay the lowest spread or commission available.
The Fund may, in circumstances in which two or more dealers are in a position
to offer comparable results, give preference to a dealer which has provided
statistical or other research services to the Fund. By allocating transactions
in this manner, the Adviser is able to supplement its research and analysis with
the views and information of other securities firms.
PORTFOLIO TURNOVER. A change in securities held in the portfolio of a Fund is
known as "Portfolio Turnover" and may involve the payment by a Fund of dealer
mark-ups or brokerage or underwriting commissions and other transaction costs on
the sale of securities, as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover rate for a fiscal year is the percentage
determined by dividing the lesser of the cost of purchases or proceeds from
sales of portfolio securities by the average of the value of portfolio
securities during such year, all excluding securities whose maturities at
acquisition were one year or less. A Fund cannot accurately predict its
turnover rate, however the rate will be higher when a Fund finds it necessary to
significantly change its portfolio to adopt a temporary defensive position or
respond to economic or market events. A high turnover rate would increase
commission expenses and may involve realization of gains. The ability of a Fund
to make purchases and sales of securities and to engage in options and futures
transactions will be limited by certain requirements of the Internal Revenue
Code, including a requirement that less than 30% of the Fund's annual gross
income be derived from gains on the sale of securities and certain other assets
held for less than three months.
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SERVICES OF THE ADVISER AND ADMINISTRATOR. Pursuant to an Investment Advisory
Agreement with the Fund, Northstar Investment Management Corporation acts as
the investment adviser to the Fund. In this capacity, the Adviser, subject to
the authority of the Trustees, and subject to certain responsibilities being
delegated to the Subadviser, is responsible for furnishing continuous investment
supervision to the Fund and is responsible for the management of the Fund's
portfolio.
The Adviser is an indirect, majority owned subsidiary of ReliaStar Financial
Corporation ("ReliaStar"). Combined minority interests held by members of
senior management currently equal 20%. ReliaStar is a publicly traded holding
company whose subsidiaries specialize in the insurance business. Through the
Affiliated Insurance Companies and other subsidiaries, ReliaStar issues and
distributes individual life insurance and annuities, employee benefit contracts,
retirement contracts and life and health reinsurance, and mutual funds and
provides related investment management services. The address of the Adviser is
Two Pickwick Plaza, Greenwich, CT 06830. The address of ReliaStar is 20
Washington Avenue South, Minneapolis, MN 55401.
The Adviser charges a fee at the annual rate of 1.00% of aggregate average
daily net assets of the Fund.
The Investment Advisory Agreement was approved by the Trustees of the Trust on
January 26, 1994, and by the sole Shareholder of each Fund on April 15, 1994.
The Investment Advisory Agreement became effective on May 2, 1994 and continued
in effect for a period of two years and was renewed by the Trustees for one year
on April 25, 1996. Thereafter, the Investment Advisory Agreement will continue
in effect from year to year if specifically approved annually by (a) the
Trustees, acting separately on behalf of each Fund, including a majority of the
Disinterested Trustees, or (b) a majority of the outstanding voting securities
of each class of each Fund as defined in the 1940 Act.
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The Investment Advisory Agreement may be terminated without penalty at any time
by a similar vote upon 60 days' notice or by the Adviser upon 60 days' written
notice and will automatically terminate in the event of its assignment as
defined in Section 2(a)(4) of the 1940 Act.
Northstar Administrators Corporation ("Administrator") serves as administrator
for the Fund pursuant to an Administrative Services Agreement with the Fund.
The Administrator is an affiliate of the Adviser. The address of the
Administrator is Two Pickwick Plaza, Greenwich, Connecticut 06830. Subject to
the supervision of the Board of Trustees, the Administrator provides the overall
business management and administrative services necessary to the proper conduct
of the Fund's business, except for those services performed by the Fund's
Adviser under the Investment Advisory Agreement, and the custodian and
accounting agent for the Funds under the Custodian Agreement.
The Administrator acts as liaison among these service providers to the Funds.
The Administrator is also responsible for ensuring that the Funds operate in
compliance with applicable legal requirements and for monitoring the Adviser for
compliance with requirements under applicable law and with the investment
policies and restrictions of the Funds.
The Administrator's fee is accrued daily against the value of the Fund's net
assets and is payable by each Fund monthly. The fee is computed daily and
payable monthly, at an annual rate of .10% of each Fund's average daily net
assets.
The Administrative Services Agreement was approved by the Trustees of the Trust
on January 26, 1994. The Administrative Services Agreement became effective on
May 2, 1994 and continued in effect for a period of two years and was renewed by
the Trustees for one year on April 25, 1996, and from year to year thereafter,
provided such continuance is approved annually by a majority of the Trustees of
the Trust.
SERVICES OF THE SUBADVISER. Pursuant to a Subadvisory Agreement between
Northstar and Brandes Investment Partners, L.P. ("Brandes"), dated June __,
1997, Brandes acts as Subadviser to the Fund. In this capacity, Brandes,
subject to the supervision and control of Northstar and the Trustees of the
Fund, will manage the Fund's portfolio investments, consistently with their
investment objective, and will execute any of the Fund's investment policies
that it deems appropriate to utilize from time to time. Fees payable under the
Subadvisory Agreement will accrue daily and be paid monthly by Northstar. As
compensation for its services, Northstar will pay Brandes at the annual rate
of 50% of the management fee that the Fund pays Northstar. Brandes' address is
12750 High Bluff Drive, San Diego, California 92130. Charles Brandes, who
controls the general partner of Brandes, serves as one of the managing
directors of Brandes. The Subadvisory Agreement for the Fund was approved by
the Trustees of the Fund on April 24, 1997. The Subadvisory Agreement may be
terminated without payment of any penalty by Northstar, Brandes, the Trustees
of the Fund, or the shareholders of the Fund on not more than 60 days' and not
less than 30 days' prior written notice. Otherwise, the Subadvisory Agreement
will remain in effect for two years and will, thereafter, continue in effect
from year to year, subject to the annual approval of the Trustees of the Fund,
or the vote of a majority of the outstanding voting securities of the Fund,
and the vote, cast in person at a meeting duly called and held, of a majority
of the Trustees of the Fund who are not parties to the Subadvisory Agreement
or "interested persons" (as defined in the 1940 Act) of any such Party.
NET ASSET VALUE. The net asset value per share of the Fund will be determined
at the close of the general trading session of the New York Stock Exchange (the
"Exchange"), on each business day the Exchange is open. The Exchange is
scheduled to be closed on New Year's Day, President's Day (observed), Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
The net asset value per share of the Fund is computed by dividing the value of
the Fund's securities, plus any cash and other assets (including dividends and
interest accrued but not collected) less all liabilities (including accrued
expenses) by the number of shares of the Fund outstanding. See the Trust's
current Prospectus for more information.
PURCHASES, REDEMPTIONS, AND EXCHANGE TRANSACTIONS. For information on purchases
and redemptions of shares, see "Purchase of Shares" and "Redemption of Shares"
in the Trust's Prospectus. The Trust may suspend the right of redemption of
shares of any Fund and may postpone payment for more than seven days for any
period: (i) during which the New York Stock Exchange is closed other than
customary weekend and holiday closings or during which trading on the New York
Stock Exchange is restricted; (ii) when the Securities and Exchange Commission
determines that a state of emergency exists which may make payment or transfer
not reasonably practicable; (iii) as the Securities and Exchange Commission may
by order permit for the protection of the security holders of the Funds; or (iv)
at any other time when the Funds may, under applicable laws and regulations,
suspend payment on the redemption of their shares.
Shares of any Fund may be exchanged for shares of any other Fund. Exchanges
are treated as a redemption of shares of one Fund and a purchase of shares of
one or more of the other Funds and are effected at the respective net asset
value per share of each Fund on the date of the exchange. The Trust reserves
the right to modify or discontinue its exchange privilege at any time without
notice.
Variable Contract Owners do not deal directly with the Trust with respect to the
purchase, redemption, or exchange of shares of a Fund, and should refer to the
prospectus for the Variable Contract for information on allocation of premiums
and on transfers of account value among divisions of the insurance company
separate account that invest in the Funds.
The Trust reserves the right to discontinue offering shares of one or more Funds
at any time. In the event that a Fund ceases offering its shares, any
investments allocated by the insurance company to such Fund will be invested in
the fixed account portfolio or any successor to such portfolio.
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DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund will be declared
and paid quarterly. Any net realized long-term capital gains (the excess of
net long-term capital gains over net short-term capital losses) for the Fund
will be declared and paid at least once annually. Net realized short-term
capital gains may be declared and paid more frequently.
FEDERAL INCOME TAX STATUS. The Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Code. Accordingly, the
Fund generally expects not to be subject to federal income tax if it meets
certain source of income, diversification of assets, income distribution, and
other requirements, to the extent it distributes its investment company taxable
income and its net capital gains.
Distributions of investment company taxable income (which includes among other
items, interest, dividends, and net realized short-term capital gains in excess
of net realized long-term capital losses) and of net realized capital gains,
whether received in cash or additional shares, are included in the gross income
of the shareholder (Variable Account). Distributions of investment company
taxable income are treated as ordinary income for tax purposes in the hands of a
separate account. Net capital gains designated as capital gain distributions by
the Fund will, to the extent distributed, be treated as long-term capital gains
in the hands of the Variable Account regardless of the length of time the
Variable Account may have held the shares. A distribution will be treated as
paid on December 31 of the calendar year if it is declared by the Fund in
October, November, or December of that year to the shareholder of record on a
date in such a month and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to the Variable Account in
the calendar year in which they are declared, rather than the calendar year in
which they are received. Tax consequences to the Variable Contract Owners are
described in the prospectus for the Variable Account.
If the Fund invests in stock of certain foreign corporations that generate
largely passive investment-type income, or which hold a significant percentage
of assets that generate such income (referred to as "passive foreign investment
companies" or "PFICs"), these investments would be subject to special tax rules
designed to prevent deferral of U.S. taxation of the Fund's share of the PFIC's
earnings. In the absence of certain elections to report these earnings on a
current basis, regardless of whether the Fund actually receives any
distributions from the PFIC, investors in the Fund would be required to report
certain "excess distributions" from, and any gain from the disposition of stock
of, the PFIC as ordinary income. This ordinary income would be allocated
ratably to the Fund's holding period for the stock. Any amounts allocated to
prior years would be taxable at the highest rate of tax applicable in that year,
increased by an interest charge determined as though the amounts were
underpayments of tax.
Certain requirements relating to the qualification of the Fund as a regulated
investment company under the Code may limit the extent to which the Fund will be
able to engage in transactions in
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options, futures contracts, or forward contracts. In addition, certain Fund
investments may generate income for tax purposes which must be distributed even
though cash representing such income is not received until a later period. To
timely meet its distribution requirements, the Fund may in those circumstances
be forced to raise cash by other means, including borrowing or disposing of
assets at a time when it may not otherwise be advantageous to do so.
To comply with regulations under Section 817(h) of the Code, the Fund generally
will be required to diversify its investments, so that on the last day of each
quarter of a calendar year, no more than 55% of the value of its assets is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. For this purpose,
securities of a single issuer are treated as one investment and each U.S.
Government agency or instrumentality is treated as a separate issuer. Any
security issued, guaranteed, or insured (to the extent so guaranteed or insured)
by the U.S. or an agency or instrumentality of the U.S. is treated as a security
issued by the U.S. Government or its agency or instrumentality, whichever is
applicable. These regulations will limit the ability of the Fund to invest more
than 55% of its assets in direct obligations of the U.S. Treasury or in
obligations which are deemed to be issued by a particular agency or
instrumentality of the U.S. Government. If the Fund fails to meet the
diversification requirements under Code Section 817(h), income with respect to
Variable Contracts invested in the Fund at any time during the calendar quarter
in which the failure occurred could become currently taxable to the owners of
such Variable Contracts and income for prior periods with respect to such
Contracts also would be taxable, most likely in the year of the failure to
achieve the required diversification. Other adverse tax consequences also could
ensue.
In connection with the issuance of the regulations governing diversification
under Section 817(h) of the Code, the Treasury Department announced that it
would issue future regulations or rulings addressing the circumstances in which
a Variable Contract owner's control of the investments of a separate account may
cause the contract owner, rather than the insurance company, to be treated as
the owner of the assets held by a separate account. If the Variable Contract
Owner is considered the owner of the securities underlying a separate account,
income and gains produced by those securities would be included currently in the
Variable Contract owner's gross income. Although it is not known what standards
will be incorporated in future regulations or other pronouncements, the Treasury
staff has indicated informally that it is concerned that there may be too much
contract owner control where the Fund underlying a separate account invests
solely in securities issued by companies in a specific industry. Similarly, the
ability of a contract owner to select a Fund representing a specific economic
risk may also be prescribed. These future rules and regulations proscribing
investment control may adversely affect the ability of the Fund to operate as
described in this Prospectus. There is, however, no certainty as to what
standard, if any, Treasury will ultimately adopt, and there can be no certainty
that the future rules and regulations will not be given retroactive application.
In the event that unfavorable rules or regulations are adopted, there can be no
assurance that this Fund will be able to operate as currently described in the
Prospectus, or that the Fund will not have to change its investment objective,
investment policies, or investment restrictions. While the Fund's investment
objective is fundamental and may be changed only by a vote of a majority of
its outstanding shares, the Trustees have reserved the right to modify the
investment policies of the Fund as
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necessary to prevent any such prospective rules and regulations from causing the
Variable Contract Owners to be considered the owners of the Funds underlying the
Variable Account.
Reference is made to the prospectus of the Variable Account for information
regarding the federal income tax treatment of distributions to the Variable
Account.
TRUSTEES AND OFFICERS. The Trustees and principal Officers of the Fund and
their business affiliations for the past five years are set forth below. Unless
otherwise noted, the mailing address of the Trustees and Officers of the Fund is
c/o Northstar Investment Management Corporation, Two Pickwick Plaza, Greenwich,
CT 06830. "A" signifies a member of the Audit Committee, and "V" signifies a
member of the Valuation Committee, of the Board.
JOHN TURNER * -- TRUSTEE AND CHAIRMAN. Chairman and Chief Executive Officer of
ReliaStar Financial Corp. and ReliaStar Life Insurance Co. ("ReliaStar Life")
since May 1993, and Chairman of other ReliaStar affiliated insurance companies
since 1995. Prior to May 1993, President and Chief Executive Officer of
ReliaStar Financial Corp. and ReliaStar Life. Director of Northstar and
affiliates and Trustee and Chairman of other Northstar affiliated investment
companies.
MARK L. LIPSON * -- TRUSTEE AND PRESIDENT. Director, Chairman and Chief
Executive Officer of Northstar Investment Management Corporation and Northstar,
Inc. Director and President of Northstar Administrators Corporation and
Director, Chairman, Chief Executive Officer of Northstar Distributors, Inc.
Trustee and President of other Northstar affiliated investment companies. Prior
to August, 1993, Director, President and Chief Executive Officer of National
Securities & Research Corporation and President and Director/Trustee of the
National Affiliated Investment Companies and certain of National's subsidiaries.
PAUL S. DOHERTY -- TRUSTEE. (A). President, Doherty, Wallace, Pillsbury and
Murphy, P.C., Director, Tambrands, Inc. Trustee of other Northstar affiliated
investment companies.
ROBERT B. GOODE, JR. -- TRUSTEE. (V). Retired. From 1990 to 1991, Chairman of
The First Reinsurance Company of Hartford. From 1987 to 1989, President and
Director of American Skandia Life Assurance Company. Trustee of other Northstar
affiliated investment companies.
ALAN R. GOSULE. -- TRUSTEE. (A). Partner, Rogers & Wells. Director, F.L.
Putnam Investment Management Company.
WALTER H. MAY, JR. -- TRUSTEE. (A). Retired. Former Marketing Director for
Piper Jaffray, Inc.
DAVID W.C. PUTNAM. -- TRUSTEE (v). President and Director of F.L. Putnam
Securities Company F.L. Putnam Investment Management Co., Interstate Power Co.,
Trust Realty Corp. and Bow Ridge Mining Co; Director of Anchor Investment
Management Corp; President and Trustee of Anchor Capital Accumulation Trust,
Anchor International Bond Trust, Anchor Gold and Currency Trust, Anchor
Resources and Commodities Trust and Anchor Strategic Assets Trust.
JOHN R. SMITH -- TRUSTEE. (A). President (since 1991) of New England
Fiduciary Company; Chairman (since 1987) Massachusetts Educational Financing
Authority; Vice Chairman of Massachusetts Health and Education Authority, and
former Financial Vice President of Boston College (1970-1991).
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DAVID W. WALLACE -- TRUSTEE. (A)(V). Chairman of FECO Engineered Systems, Inc.,
Lone Star Industries and Putnam Trust Company. He is also President and Trustee
of Robert R. Young Foundation and Governor of the New York Hospital. Director
of UMC Electronics and Zurn Industries, Inc. Former Chairman and Chief
Executive Officer, Todd Shipyards and Bangor Punta Corporation, and former
Chairman and Chief Executive Officer of National Securities & Research
Corporation, and Chairman and Director/Trustee of the National Affiliated
Investment Companies. Trustee of other Northstar affiliated investment
companies.
THOMAS OLE DIAL -- VICE PRESIDENT. Executive Vice President and Chief
Investment Officer- Fixed Income of Northstar Investment Management Corporation.
From 1989 to August 1993, Executive Vice President and Chief Investment Officer-
Fixed Income of National Securities & Research Corporation. From 1988 to 1989,
President, Dial Capital Management. Vice President of other Northstar affiliated
investment companies.
GEOFFREY WADSWORTH -- VICE PRESIDENT. Vice President of Northstar Investment
Management Corporation and Portfolio Manager. Former Vice President and
Portfolio Manager of National Securities & Research Corp. Vice President of
other Northstar affiliated investment companies.
AGNES MULLADY -- VICE PRESIDENT AND TREASURER. Senior Vice President and Chief
Financial Officer of NIMC, Senior Vice President and Treasurer of Northstar
Administrators Corporation, and Vice President and Treasurer of Northstar
Distributors, Inc. From 1987 to 1993 Treasurer and Vice President of National
Securities & Research Corporation. Vice President and Treasurer of other
Northstar affiliated investment companies.
* Messrs. Turner and Lipson are each deemed to be an "interested person" within
the meaning of the 1940 Act.
NIMC and Northstar Administrators Corporation make their personnel available to
serve as Officers and "Interested Trustees" of the Fund. All Officers and
Interested Trustees of the Fund
23
<PAGE>
are compensated by NIMC or Northstar Administrators Corporation. Trustees who
are not "interested persons" of the Adviser are paid an annual retainer fee of
$500, which fee is allocated evenly among the five Funds in the Northstar
Variable Trust. No meeting or committee fees will be paid until combined assets
in the Funds reach $50 million; however the Funds reimburse Trustees for all
expenses incurred by them in connection with such meetings. The Funds currently
have an Audit Committee (members noted by (a), a Valuation Committee (members
noted by (v), and a Nominating Committee consisting of all of the Independent
Trustees. On March 31, 1997, no Officer or Trustee of the Funds, owned
beneficially or of record or had an interest in shares of the Fund.
OTHER INFORMATION
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P. has been selected as the
independent accountants for the Trust. Coopers & Lybrand L.L.P. will audit the
Trust's annual financial statements and express an opinion thereon.
CUSTODIAN/ACCOUNTING SERVICES AGENT. State Street Bank and Trust Company acts
as custodian of the Fund's assets and performs fund accounting services.
REPORTS TO SHAREHOLDERS. The fiscal year of the Trust ends on December 31. The
Fund will send financial statements to its shareholders at least semi-annually.
An annual report containing financial statements audited by the independent
accountants will be sent to shareholders each year.
SHAREHOLDER AND TRUSTEE RESPONSIBILITY. Shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the Trust. The risk of a shareholder incurring
any financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations.
The Declaration of Trust contains an express disclaimer of shareholder liability
for acts or obligations of the Trust and provides that notice of the disclaimer
must be given in each agreement, obligation or instrument entered into or
executed by the Trust or Trustees. The Declaration of Trust provides for
indemnification of any shareholder held personally liable for the obligations of
the Trust and also provides for the Trust to reimburse the shareholder for all
legal and other expenses reasonably incurred in connection with any such claim
or liability.
Under the Declaration of Trust, the trustees or officers are not liable for
actions or failure to act; however, they are not protected from liability by
reason of their willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their office. The Trust
provides indemnification to its trustees and officers as authorized by the 1940
Act and the rules and regulations thereunder.
FINANCIAL STATEMENTS. The Northstar Variable Trust's audited financial
statements dated December 31, 1996 and the report of the independent
accountants, Coopers & Lybrand, L.L.P. with respect to such financial
statements, are hereby incorporated by reference to the Annual Report to
Shareholders of the Northstar Variable Trust for the fiscal year ended December
31, 1996.
REGISTRATION STATEMENT. A registration statement has been filed with the
Securities and Exchange Commission under the 1933 Act and the 1940 Act. The
Prospectus and this Statement of Additional Information do not contain all
information set forth in the registration statement, its amendments and exhibits
thereto that the Trust has filed with the Securities and Exchange Commission,
Washington, D.C., to all of which reference is hereby made.
24
<PAGE>
PERFORMANCE INFORMATION. The Fund may, from time to time, include its total
return in advertisements or reports to shareholders or prospective investors.
Performance information for the Fund will not be advertised or included in
sales literature unless accompanied by comparable performance information for a
Separate Account to which the Fund offers its shares.
A. TOTAL RETURN. Standardized quotations of average annual total return for
the Fund will be expressed in terms of the average annual compounded rate of
return for a hypothetical investment in the Fund over periods of 1,5 and 10
years (or up to the life of the Fund), calculated pursuant to the following
formula: P(1 + T) to the power of n = ERV (where P = a hypothetical initial
payment of $1,000, T = the average annual total return, n = the number of years,
and ERV = the ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the period). All total return figures reflect the deduction of
Fund expenses (on an annual basis), and assume that all dividends and
distributions on shares are reinvested when paid.
Performance information for the Fund may be compared in reports and promotional
literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P 500"), Dow Jones
Industrial Average ("DJIA"), or other unmanaged indices so that investors may
compare the Fund's results with those of a group of unmanaged securities widely
regarded by investors as representative of the securities markets in general;
(ii) other groups of mutual funds tracked by Lipper Analytical Services, Inc., a
widely used independent research firm which ranks mutual funds by overall
performance, investment objectives, and assets, or tracked by other services,
companies, publications, or persons who rank mutual funds on overall performance
or other criteria; and (iii) the Consumer Price Index (measure for inflation) to
assess the real rate of return from an investment in the Fund; (iv) well known
monitoring sources of CD performance rates such as Salomon Brothers, Federal
Reserve Bulletin, American Bankers, Tower Data/The Wall Street Journal.
Unmanaged indices may assume the reinvestment of dividends but generally do not
reflect deductions for administrative and management costs and expenses.
The Fund also may quote annual, average annual and annualized total return and
aggregate total return performance data, both as a percentage and as a dollar
amount based on a hypothetical $10,000 investment for various periods other than
those noted below. Such data will be
25
<PAGE>
computed as described above, except that the rates of return calculated will not
be average annual rates, but rather, actual annual, annualized or aggregate
rates of return.
B. YIELD. Yield is the net annualized yield based on a specified 30-day (or
one month) period assuming a semiannual compounding of income. Yield is computed
by dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period, according to the
following formula:
Yield = 2[(a-b + 1)6 -1]
cd
Where:
a = dividends and interest earned during the period, including the
amortization of market premium or accretion of market discount
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
To calculate interest earned (for the purpose of "a" above) on debt obligations,
the Fund computes the yield to maturity of each obligation held by the Fund
based on the market value of the obligation (including actual accrued interest)
at the close of the last business day of the month, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The yield to maturity is then divided by 360 and the quotient is
multiplied by the market value of the obligation (including actual accrued
interest) to determine the interest income on the obligation for each day of the
subsequent month that the obligation is in the Fund's portfolio.
Solely for the purpose of computing yield, the Fund recognizes dividend income
by accruing 1/360 of the stated dividend rate of a security in the portfolio.
Undeclared earned income, computed in accordance with generally accepted
accounting principles, may be subtracted from the maximum offering price.
Undeclared earned income is the net investment income which, at the end of the
base period, has not been declared as a dividend, but is reasonably expected to
be declared as a dividend shortly thereafter.
Quotations of yield or total return for the Fund will not take into account
charges and deductions against the Variable Account to which the Fund's shares
are sold or charges and deductions against the Variable Contracts issued by
ReliaStar or its affiliates. The Fund's yield and total return should not be
compared with mutual funds that sell their shares
26
<PAGE>
directly to the public since the figures provided do not reflect charges against
the Variable Account or the Variable Contracts. Performance information for the
Fund reflects only the performance of a hypothetical investment in the Fund
during the particular time period in which the calculations are based.
Performance information should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the portfolios and the
market conditions during the given time period, and should not be considered as
a representation of what may be achieved in the future.
27
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: Not Applicable
(b) EXHIBITS - NORTHSTAR VARIABLE TRUST
(1)(b) Form of Amendment to Declaration of Trust
(5)(d) Form of Amendment to Investment Advisory Agreement
(5)(e) Form of Subadvisory Agreement for Northstar International
Value Fund
9 (a) Form of Amendment to Administrative Services Agreement
(10) Opinion of Counsel
- ----------------------------
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
ReliaStar Life Insurance Company (formerly "Northwestern National Life Insurance
Company") and Northern Life Insurance Company, and ReliaStar Bankers Security
Life Insurance Co., which are affiliated through a common parent company,
ReliaStar Financial Corp., on behalf of their respective separate accounts,
together own a majority of the outstanding shares of the Trust. These
insurance companies will vote shares of the Trust in accordance with
instructions of contract owners having interests in these separate accounts.
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of December 31, 1996, the Trust had three security holders.
ITEM 27. INDEMNIFICATION
Section 4.3 of Registrant's Declaration of Trust provides the following:
(a) Subject to the exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust to the fullest extent permitted by
law against all liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer and against
amounts paid or incurred by him in the settlement thereof; and
(ii) the word "claim", "action", "suit" or "proceeding" shall apply to all
claims, actions or suits or proceedings (civil, criminal,
administrative or other including appeals), actual or threatened; and
the words "liability" and "expenses" shall include without limitation,
attorneys fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a series thereof, or the
Shareholders by reason of a final adjudication by a court or other
body before which a proceeding was brought or that he engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in reasonable belief that
his action was in the best interest of the Trust; and
(iii)in the event of a settlement or other disposition not involving a
final adjudication as provided in paragraph (b) (i) or (b) (ii)
resulting in a payment by a Trustee or officer, unless there has been
a determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office:
(A) by the court or other body approving the settlement or other disposition;
or
(B) based upon the review of readily available facts (as opposed to full trial-
type inquiry) by (x) vote of a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter) or (y) written opinion of
independent legal counsel.
<PAGE>
(C) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee
or officer and shall inure to the benefit of the heirs, executors,
administrators and assigns of such a person. Nothing contained herein shall
affect any rights to indemnification to which personnel of the Trust other
than Trustees and officers may be entitled by contract or otherwise under
law.
(D) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled to
indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other appropriate
security provided by the recipient or the Trust shall be insured
against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the
matter) or an independent legal counsel in a written opinion shall
determine, based upon a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that
the recipient ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is not (i) an
Interested Person of the Trust (including anyone who has been exempted from
being an Interested Person by any rule, regulation or order of the Commission),
or (ii) involved in the claim, action, suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in
connection with the successful defense of any action suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy, as expressed in the Act and be governed by final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Fund" in the Prospectus and "Services of the Adviser and
Administrator", "Services of the Subadviser", and "Trustees and Officers" in the
Statement of Additional Information, each of which is included in the
Registration Statement.
<PAGE>
Set forth is a list of each officer and director of the Adviser indicating each
business, profession, vocation or employment of a substantial nature in which
each such person has been engaged since July 31, 1994.
<TABLE>
<CAPTION>
Position with Other Substantial
Investment Business, Profession
Name Adviser Vocation or Employment
- ----------------------------------------------------------------------------
<S> <C>
John Turner Director Chairman and CEO, ReliaStar Financial
Corp; Director of Northstar Affiliates;
Trustee and Chairman, Northstar
Affiliated Investment Companies.
<PAGE>
John Flittie Director President, ReliaStar Financial Corp.
Director, Northstar Affiliates.
Mark L. Lipson Chairman/CEO Director and Officer of Northstar
Director Distributors, Inc., Northstar Administrators
Corp. and Northstar, Inc. Trustee
and President, Northstar Affiliated
Investment Companies.
Robert J. Adler Executive Vice President, Northstar Distributors, Inc.
President, Sales
& Marketing
Thomas Ole Dial Executive Vice Vice President, Northstar Affiliated
President - Chief Investment Companies, and Principal, TD
Investment Officer, Associates Inc.
Fixed Income
Geoffrey Wadsworth Vice President/ Vice President - Northstar Affiliated
Investments and Investment Companies.
Portfolio Manager
Ryan Johanson Vice President- Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager, Director of Global Market
Risk Management, and Senior Manager
of Banque Indosuez.
Jeffrey Aurigemma Vice President - Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager.
Michael Graves Vice President Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager.
Agnes Mullady Sr. Vice President Vice President & Treasurer of Northstar
and CFO Affiliates and the Northstar Affiliated
Investment Companies.
Gertrude Purus Vice President Vice President Northstar Distributors and
Operations Northstar Administrators Corp.
<PAGE>
Stephen Vondrak Vice President Vice President - Northstar Distributors, Inc.
Sales/Marketing Former Regional Marketing
Manager with Roger Engemann
and Associates from 1991-1994.
Mark Sfarra Vice President - Vice President - Northstar Distributors, Inc.
Marketing
For information as to the business, profession, vocation or employment of a
substantial nature of the Subadviser, Brandes Investment Partners, L.P., and
its officers, reference is made to form ADV filed under the Investment Advisers
Act of 1940 by Brandes Investment Partners, L.P. (File No. 801-24896).
ITEM 29 . PRINCIPAL UNDERWRITER
There is no principal underwriter for Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
State Street Bank and Trust Co., located at 225 Franklin Street, Boston, MA
02110-2804 maintains such records as Custodian, Transfer Agent and Fund
Accounting Agent, for the Trust and each Series:
(1) Receipts and delivery of securities including certificate numbers;
(2) Receipts and disbursement of cash;
(3) Records of securities in transfer, securities in physical possession,
securities owned and securities loaned.
(4) Shareholder Records
All other records required by item 30(a) are maintained at the office of the
Administrator, Two Pickwick Plaza, Greenwich, CT 06830 and the office of the
Subadviser, 12750 High Bluff Drive, San Diego, CA 92130.
ITEM 31. Management Services
Not Applicable
<PAGE>
ITEM 32. Undertakings
(a) Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee or Trustees when
requested in writing to do so by the holders of at least 10% of the Trusts'
outstanding shares of beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
(b) Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders, upon
request and without charge.
(c) Registrant hereby undertakes to file a post-effective amendment, using
financial statements, which need not be certified, within four to six months
from the effective date of the Fund's registration statement.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Post-
Effective Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Greenwich and
the State of Connecticut on the 9th day of May, 1997.
REGISTRANT
By: MARK L. LIPSON
--------------------------------------
Mark L. Lipson, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
SIGNATURES TITLE DATE
JOHN G. TURNER Chairman and May 9, 1997
John G. Turner* Trustee
MARK L. LIPSON President and May 9, 1997
Mark L. Lipson* Trustee
JOHN R. SMITH Trustee May 9, 1997
John R. Smith*
PAUL S. DOHERTY Trustee May 9, 1997
Paul S. Doherty*
DAVID W. WALLACE Trustee May 9, 1997
David W. Wallace*
ROBERT B. GOODE, JR. Trustee May 9, 1997
Robert B. Goode, Jr.*
WALTER MAY Trustee May 9, 1997
Walter May*
<PAGE>
ALAN L. GOSULE Trustee May 9, 1997
Alan L. Gosule*
DAVID W.C. PUTNAM Trustee May 9, 1997
David W.C. Putnam*
AGNES MULLADY Principal Financial May 9, 1997
Agnes Mullady and Accounting
Officer
By: /s/ AGNES MULLADY*
Agnes Mullady
Attorney-in-fact
*Executed pursuant to powers of attorney filed with PEA No. 4.
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Under
Part C of Form N-1A Name of Exhibit Page Number Herein
------------------- --------------- ------------------
1 Form of Declaration of Trust (1)
(a) Form of Amendment to Declaration of Trust (2)
(b) Form of Amendment to Declaration of Trust*
2 Form of By-Laws (1)
5(a) Form of Advisory Agreement (1)
(b) Form of Subadvisory Agreement for Northstar Growth
Fund (1)
(c) Form of Subadvisory Agreement for Northstar
Income and Growth Fund (2)
(d) Form of Amendment to Investment Advisory
Agreement*
(e) Form of Subadvisory Agreement for Northstar
International Value Fund*
8 Form of Custody Agreement (1)
9 Form of Administrative Services
Agreement (1)
(a) Form of Amended Administrative Services
Agreement*
10 Opinion of Counsel*
11 Consent of Independent Accountants**
12 N/A
16 N/A
17 Powers of Attorney (1)
27 N/A
(1) Filed as part of PEA No. 4 and incorporated herein by reference.
(2) Filed as part of PEA No. 6 and incorporated herein by reference.
* Filed herewith.
** To be filed by amendment.
</TABLE>
<PAGE>
EXHIBIT 1(B) NORTHSTAR VARIABLE TRUST
ESTABLISHMENT AND DESIGNATION
OF SERIES, PAR VALUE $0.01 PER SHARE
The undersigned, being a majority of the Trustees of the Northstar Variable
Trust, a Massachusetts business trust (the "Trust"), acting pursuant to Section
8.3 of the Declaration of Trust dated December 17, 1993, as amended (the
"Declaration of Trust"), hereby establish an additional series of the Trust (the
"Fund"). The Fund hereby created having the following special and relative
rights:
1. The Fund shall be designated Northstar International Value Fund.
2. The Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in the
then current prospectus and registration statement for the Fund
under the Securities Act of 1933. Each share of the beneficial
interest of the Fund ("Share") shall be redeemable, shall represent
a pro rata beneficial interest in the assets allocated to such
shares of the Fund, and shall be entitled to receive its pro
rata share of net assets allocable to such Shares of that Fund upon
liquidation of the Fund, all as provided in the Declaration of
Trust. The proceeds of sales of Shares of the Fund, together with
any income and gain thereon, less any dimunition or expenses
thereof, shall irrevocably belong to the Fund, unless otherwise
required by law.
3. Each Share of beneficial interest of the Fund shall be entitled to
one vote (or fraction thereof in respect of a fractional share) on
matter which such Shares shall be entitled to vote. Shareholders of
the Fund shall vote together as a class on any matter, except to
the extent otherwise required by the Investment Company Act of 1940,
or when the Trustees have determined that the matter affects only
the interest of Shareholders of certain series within the Trust, in
which case only the Shareholders of such series shall be entitled
to vote thereon.
4. The assets and liabilities of the Trust shall be allocated among the
Fund and each other series within the Trust, as set forth in
Section 5.11 of the Declaration of Trust, except as described below:
(a) Costs incurred by the Trust on behalf of the Fund in
connection with the organization and initial registration
and public offering of Shares of the Fund shall be
amortized for the Fund over the lesser of the life
of the Fund or the five year period beginning with the
month that the Fund commences operations.
(b) The Trustees may from time to time in particular cases
make specific allocation of assets or liabilities among
the series within the Trust and each allocation of
liabilities, expenses, costs, charges and reserves by the
<PAGE>
Trustees shall be conclusive and binding upon the
Shareholders of all series for all purposes.
5. The Tustees (including any successor Trustee) shall have the right
at any time and from time to time to reallocate assets and expenses
or to change the designation of the Fund thereof now or hereafter
created, or to otherwise change the special and relative rights of
the Shareholders of the Fund.
Dated: April 24, 1997
- ------------------------- -------------------------
John G. Turner Mark L. Lipson
- ------------------------- -------------------------
Paul S. Doherty Robert B. Goode, Jr.
- ------------------------- -------------------------
David W. Wallace Walter May
- ------------------------- -------------------------
David W.C. Putnam Alan L. Gosule, Esq.
- -------------------------
John R. Smith
<PAGE>
EXHIBIT 5(D) NORTHSTAR VARIABLE TRUST
INVESTMENT ADVISORY AGREEMENT
As Amended April 24, 1997
AGREEMENT made this 2nd day of May, 1994 by and between NORTHSTAR/NWNL
TRUST, a Massachusetts business trust, (the "Trust") and NORTHSTAR INVESTMENT
MANAGEMENT CORP., a Delaware business corporation (the "Adviser").
The Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
consisting of five separate diversified series, Northstar Growth Fund, Northstar
High Yield Bond Fund, Northstar Multi-Sector Bond Fund, Northstar Income and
Growth Fund, and Northstar International Value Fund (each a "Fund" and
collectively the "Funds").
The Trust desires to retain the Adviser to render investment advisory
services to the Funds, and the Adviser is willing to render such investment
advisory on the terms set forth below.
The parties agree as follows:
1. The Trust hereby appoints the Adviser to act as investment adviser
to the Trust and the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services described, for the compensation provided, in this Agreement.
2. Subject to the supervision of the Trustees, the Adviser shall manage
the investment operations of the Funds and the composition of each Fund's
portfolio, including the purchase and retention and disposition of portfolio
securities, in accordance with each Fund's investment objectives, policies and
restrictions as stated in the Trust's Prospectus and Statement of Additional
Information (as defined below) subject to the following understandings:
(a) The Adviser shall provide supervision of each Fund's investments
and determine from time to time what investments will be made, held or disposed
of or what securities will be purchased and retained, sold or loaned by each
Fund, and what portion of the assets will be invested or held uninvested as
cash.
(b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement.
(c) The Adviser, in the performance of its duties and obligations under
this Agreement, shall (i) act in conformity with the Declaration of Trust,
By-Laws, Prospectus and Statement of Additional Information of the Trust, with
the instructions and directions of the Trustees and (ii) conform to and comply
with the requirements of the Investment Company Act and all other applicable
federal and state laws and regulations.
(d) (i) The Adviser shall determine the securities to be purchased or
sold by each Fund and will place orders pursuant to its determinations with or
through such persons, brokers or dealers to carry out the policy with respect to
brokerage as set forth in the Trust's Prospectus and Statement of Additional
Information or as the Trustees may direct from time to time. In providing each
Fund with investment supervision, the Adviser will give primary consideration to
securing the most favorable price and efficient execution. The Adviser may also
consider the financial responsibility, research and investment information and
other services and research related products provided by brokers or dealers who
may effect or be a party to any such transactions or other transactions to which
other clients of the Adviser may be a party. The Funds recognize that the
services and
<PAGE>
research related products provided by such brokers may be useful to the Adviser
in connection with its services to other clients.
(ii) When the Adviser deems the purchase or sale of a security
to be in the best interest of a Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be sold or purchased in order to obtain the most favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transactions, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to each Fund and to such other clients.
(e) The Adviser shall maintain, or cause to be maintained, all books
and records required under the Investment Company Act to the extent not
maintained by the custodian of the Trust. The Adviser shall render to the
Trustees such periodic and special reports as the Trustees may reasonably
request.
(f) The Adviser shall provide the Trust's custodian on each business
day information relating to all transactions concerning each Fund's assets.
(g) The investment management services of the Adviser to the Trust and
to each Fund under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services to others.
3. The Trust has delivered to the Adviser copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Declaration of Trust, as amended, as filed with the Secretary of
the Commonwealth of Massachusetts (such Declaration of Trust, as in effect on
the date hereof and as further amended from time to time, are herein called the
"Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Trustees authorizing the appointment
of the Adviser and approving this Agreement on behalf of the Trust and each
Fund;
(d) Registration Statement on Form N-lA under the Investment Company
Act and the Securities Act of 1933, as amended from time to time (the
"Registration Statement"), as filed with the Securities and Exchange Commission
(the "Commission"), relating to the Trust and shares of beneficial interest of
each Fund and all amendments thereto.
(e) Notification of Registration of the Trust under the Investment
Company Act on Form N-8A as filed with the Commission and all amendments
thereto;
(f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references to this
Agreement, the Prospectus and the Statement of Additional Information shall be
to such documents as most recently amended or supplemented and in effect.
4. The Adviser shall authorize and permit any of its directors,
officers and employees who may be elected as trustees or officers of the Trust
and/ or the Funds to serve in the capacities in which they are elected. All
services to be furnished by the Adviser under this Agreement may be furnished
through such directors, officers or employees of the Adviser.
5. The Adviser agrees that all records which it maintains for the Trust
and/or the Funds are property of the Trust and/or the Funds. The Adviser will
surrender promptly to the Trust and/or the Funds any such records upon either
the Trust's or the Fund's request. The Adviser further agrees to preserve such
<PAGE>
records for the periods prescribed in Rule 3la-2 of the Commission under the
Investment Company Act.
6. (i) In connection with the services rendered by the Adviser under
this Agreement, the Adviser will pay all of the following expenses:
(a) the salaries and expenses of all personnel of the Trust, the Funds and
the Adviser required to perform the services to be provided pursuant to
this Agreement, except the fees of the trustees who are not affiliated
persons of the Adviser, and
(b) all expenses incurred by the Adviser, the Trust or by the Funds in
connection the performance of the Adviser's responsibilities hereunder,
other than brokers' commissions and any issue or transfer taxes
chargeable to each respective Fund in connection with its securities
transactions.
7. For the services provided and the expenses assumed pursuant to this
Agreement, each Fund, other than the Northstar International Value Fund, will
pay to the Adviser as compensation a fee accrued daily and paid monthly at the
annual rate of .75% of the first $250,000,000 of aggregate average daily net
assets of each Fund; .70% of the next $250,000,000 of such assets; .65% of the
next $250,000,000 of such assets; .60% on the next $250,000,000 of such asset
and .55% on the remaining aggregate daily net assets of the Fund in excess of
$l,000,000,000. The Northstar International Value Fund will pay to the Adviser
as compensation a fee accrued daily and paid monthly at the annual rate of 1.00%
of aggregate average daily net assets of the Fund.
8. The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,
employees or agents or controlling persons shall be liable for any error or
judgment or mistake of law, or for any loss suffered by the Trust and/or a Fund
in connection with or arising out of the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
9. This Agreement shall continue in effect for a period of two years
from the date hereof and shall continue in effect thereafter for so long as such
continuance is specifically approved at least annually by the affirmative vote
of (i) a majority of the Trustees of the Trust acting separately on behalf of
each Fund, who are not interested persons of the Trust, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) a majority
of the Trustees of the Trust or the holders of a majority of the outstanding
voting securities of each respective Fund; provided however, that this Agreement
may be terminated by the Trust, on behalf of a Fund at any time, without the
payment of any penalty, by the Trustees acting on behalf of a Fund or by vote of
a majority of the outstanding voting securities (as defined in the Investment
Company Act) of a Fund, or by the Adviser at any time, without the payment of
any penalty, on not more than 60 days' nor less than 30 days' written notice to
the other party. This Agreement shall terminate automatically in the event of
its assignment provided that a transaction which does not, under the Investment
Company Act, result in a change of actual control or management of the Adviser's
business shall not be deemed to be an assignment for the purposes of this
Agreement.
10. This agreement shall terminate automatically in the event of its
assignment; the term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940.
11. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a trustee, officer
or employee of the Trust and/or the Funds to engage in any other business or to
devote his time and attention in part to the management or other aspect of any
<PAGE>
business, whether of a similar or dissimilar nature, nor limit or restrict the
right of the Adviser to engage in any other business or to render services of
any kind to any other person or entity.
12. During the term of this Agreement, the Trust and each Fund agrees
to furnish the Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of each Fund or the public, which
refer in any way to the Adviser, prior to use thereof and not to use such
material if the Adviser reasonably objects in writing within five business days
(or such other time as may be mutually agreed) after receipt. In the event of
termination of the Agreement, the Trust and/or each Fund will continue to
furnish to the Adviser such other information relating to the business affairs
of the Trust and/or each Fund as the Adviser at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
13. This Agreement may be amended by mutual agreement, but only after
authorization of such amendments by the affirmative vote of (i) the holders of
the majority of the outstanding voting securities of each Fund and ( ii) a
majority of the members of the Trustees who are not interested persons of the
Trust or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval.
14. The Adviser, the Trust and the Funds each agree that the name
"Northstar" is proprietary to, and a property right of, the Adviser. The Trusts
and the Funds agree and consent that (i) each will only use the name "Northstar"
as part of its name and for no other purpose, (ii) each will not purport to
grant any third party the right to use the name "Northstar" and (iii) upon the
termination of this Agreement, the Trust and the Funds shall, upon the request
of the Adviser, cease to use the name "Northstar", and shall use its best
efforts to cause its officers, trustees and shareholders to take any and all
actions which the Adviser may request to effect the foregoing.
15. Any notice or other communications required to be given pursuant to
this Agreement shall be deemed to be given if delivered or mailed by registered
mail, postage paid, (1) to the Adviser at Two Pickwick Plaza, Greenwich, CT
06830, Attention: Secretary; or (2) to the Trust and/or the Funds, Two Pickwick
Plaza, Greenwich, CT 06830, Attention: Assistant Secretary.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut. The terms "interested person",
"assignment", and "vote of the majority of the outstanding securities" shall
have the meaning set forth in the Investment Company Act.
17. The Declaration of Trust, establishing the Trust, dated December
17, 1993, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Northstar/NWNL Trust" refers to the
Trustees under the Declaration collectively as trustees, but not individually or
personally; and no Trustee, shareholder, officer, employee or agent of the Trust
and/or the Funds may be held to any personal liability, nor may resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Trust, but the Trust property
only shall be liable.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
written above.
NORTHSTAR VARIABLE TRUST
Attest: By:
President
NORTHSTAR INVESTMENT MANAGEMENT CORP.
Attest: By:
Sr. Vice President
<PAGE>
EXHIBIT 5(E) NORTHSTAR INTERNATIONAL VALUE FUND
SUBADVISORY AGREEMENT
AGREEMENT made this day of June, 1997 by and between Northstar Investment
Management Corporation, Delaware Corporation (hereinafter the "Adviser"),
investment adviser for the Northstar International Value Fund (hereinafter the
"Fund") a series of the Northstar Variable Trust (the "Trust") and Brandes
Investment Partners, L.P., a California limited partnership (hereinafter the
"Subadviser").
WHEREAS, the Adviser has been retained by the Trust on behalf of the
Fund to provide investment advisory services to the Fund pursuant to an
Investment Advisory Agreement made on May 2, 1994 as amended April 24, 1997 (the
"Investment Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who
are not "interested persons," as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), and the Fund's shareholders have approved the
appointment of the Subadviser to perform certain investment advisory services
for the Fund pursuant to this Subadvisory Agreement with the Adviser and the
Subadviser is willing to perform such services for the Fund;
WHEREAS, the Subadviser is a registered as an investment adviser under
the Investment Advisers Act of 1940, as amended ("Advisers Act") ;
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as
follows:
1. Appointment. The Adviser hereby appoints the Subadviser to
perform advisory services to the Fund for the periods and on the terms set
forth in this Subadvisory Agreement. The Subadviser accepts such appointment
and agrees to furnish the services herein set forth, for the compensation
herein provided.
2. Duties of Subadviser. The Adviser hereby authorizes Subadviser to
manage the investment and reinvestment of cash and investments comprising those
assets of the Fund with power on behalf of and in the name of the Fund at
Subadviser's discretion, subject at all times to the supervision of the Adviser
and the Trustees of the Fund:
(a) to direct the purchase, subscription or other acquisition, and
the sale, redemption, and exchange of investments, subject to the duty to render
to the Trustees of the Fund and the Adviser written reports of the composition
of the portfolio of the Fund as often as the Adviser or the Trustees of the Fund
shall reasonably require;
(b) to make all decisions relating to the manner, method, and
timing of investment transactions, to select brokers, dealers and other
intermediaries by or through whom such transactions will be effected, and to
engage such consultants, analysts and experts in connection therewith as may be
considered necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or
assets solely in order to execute investment transactions for the Fund, provided
the Subadviser shall have no authority to direct the transfer of the Fund's
funds or assets to itself or other affiliated persons and shall have no
authority over the disbursement (as opposed to investment decisions) of funds or
assets nor any custody of any of the Fund's funds or assets; and
(d) to take all such other actions as may be considered necessary
or appropriate to discharge its duties hereunder; PROVIDED THAT any specific or
general directions which the Trustees of the Fund or the Adviser may give in
writing to the Subadviser with regard to any of the foregoing powers shall,
unless the contrary is expressly stated herein, override the general authority
given by this provision to the extent that the Trustees of the Fund may, at any
time and from time to time, direct, either generally or to a limited extent and
either alone or in concert with the
<PAGE>
Adviser or the Subadviser (provided that such directions would not cause the
Subadviser to violate any fiduciary duties or any laws with regard to the
Subadviser's duties and responsibilities), all or any of the same as they shall
think fit and, in particular, the Adviser shall have the right to direct the
Subadviser to place trades through brokers and other agents of the Adviser's
choice, subject to such brokers or agents executing such trades on a "best
execution basis", i.e. at the best price and/or with research or other services
which render that broker's services the most appropriate for the Subadviser's
needs, and further that the Subadviser is satisfied that the dealing and
execution quality of such brokers are satisfactory to the Subadviser; and
PROVIDED FURTHER that nothing herein shall be construed as giving the
Subadviser power to manage the aforesaid cash and investments in such a manner
as would cause the Fund to be considered a "dealer" in stocks, securities or
commodities for U.S. federal income tax purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance
of the duties delineated in subparagraphs (a)-(d) above.
The Subadviser further agrees that, in performing its duties hereunder,
it will:
(a) (i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code of 1986, as amended,
(the "Code") and all other applicable federal and state laws and regulations,
the Prospectus and Statement of Additional Information for the Fund, and with
any applicable procedures adopted by the Trustees in writing and made available
to Subadviser; (ii) manage the Fund in accordance with the investment
requirements for regulated investment companies under Subchapter M of the Code
and regulations issued thereunder, and (iii) direct the placement of orders
pursuant to its investment determinations for the Fund directly with the issuer,
or with any broker or dealer, in accordance with applicable policies expressed
in the Fund's Prospectus and/or Statement of Additional Information and in
accordance with applicable legal requirements;
(b) furnish to the Fund whatever non-proprietary reports the Fund
may reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Subadviser will keep the Fund and the Trustees
informed of developments materially affecting the Fund's portfolio and shall, on
the Subadviser's own initiative, furnish to the Fund from time to time whatever
information the Subadviser believes appropriate for this purpose;
(c) make available to the Fund's administrator, Northstar
Administrators Corporation (the "Administrator"), the Adviser, and the Fund,
promptly upon their request, such copies of its investment records and ledgers
with respect to the Fund as may be required to assist the Adviser, the
Administrator and the Fund in their compliance with applicable laws and
regulations. The Subadviser will furnish the Trustees with such periodic and
special reports regarding the Fund as they may reasonably request;
(d) immediately notify the Adviser and the Fund in the event that
the Subadviser or any of its affiliates (i) becomes aware that it is subject to
a statutory disqualification that prevents the Subadviser from serving as an
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the Securities and Exchange Commission ("SEC") or other regulatory authority.
The Subadviser further agrees to notify the Fund and the Adviser immediately of
any material fact known to the Subadviser respecting or relating to the
Subadviser that is not contained in the Fund's Registration Statement, or any
amendment or supplement thereto, but that is required to be disclosed therein,
and of any statement contained therein respecting or relating to the Subadviser
that becomes untrue in any material respect. The Adviser shall likewise
immediately notify the Subadviser if it becomes aware of any regulatory action
of the type described in this subparagraph 2(d) respecting or relating to the
Fund, the Adviser, or any Affiliates of the Adviser.
3. Allocation of Charges and Expenses. The Subadviser shall pay all
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its partners, officers and employees, and
other internal operating
<PAGE>
costs. The Fund shall bear its own overhead and other internal operating costs
(whether incurred directly or by the Adviser or the Subadviser) including,
without limitation:
(a) the costs incurred by the Fund in the preparation and printing
of its Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to investors
subscribing for shares);
(b) all fees and expenses on behalf of the Fund to the Transfer
Agent and the Custodian;
(c) the reasonable fees and expenses of accountants, auditors,
lawyers and other professional advisors to the Fund;
(d) any interest, fee or charge payable on or on account of any
borrowing by the Fund;
(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share
capital of the Fund;
(f) the fees of any stock exchange or over-the-counter market on
which the shares may from time to time be listed, quoted or dealt in and the
expenses of obtaining any such listing, quotation or permission to deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect
of or in connection with the acquisition, holding or disposal of any of the
assets of the Fund or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares in
newspapers and other publications;
(j) all expenses incurred in the convening of meetings of
shareholders or in the preparation of agreements or other documents relating to
the Fund or in relation to the safe custody of the documents of title of any
investments;
(k) all Trustees communication costs; and
(1) all premiums and costs for Fund insurance and blanket
fidelity bonds.
4. Compensation. The Subadviser agrees to waive all compensation until
the Fund's net assets exceed $50 million. After the Fund's net assets exceed $50
million, the Adviser will pay the Subadviser at the end of each calendar month
an advisory fee computed daily at an annual rate equal to fifty (50) percent of
the management fee that the Fund pays the Adviser.
5. Books and Records. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by applicable laws or regulations. The Subadviser also agrees that
records it maintains and preserves pursuant to Rules 31a-2 under the 1940 Act
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Fund and will be surrendered promptly
to the Fund upon its request and the Subadviser further agrees that it will
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in
order to determine whether the operations of the Fund are being conducted in
accordance with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Subadviser shall
exercise its best business judgment and reasonable care in rendering the
services provided by it under this Subadvisory Agreement. The Subadviser shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund or the holders of
<PAGE>
the Fund's shares or by the Adviser in connection with the matters to which
this Subadvisory Agreement relates, provided that nothing in this Subadvisory
Agreement shall be deemed to protect or purport to protect the Subadviser
against liability to the Fund or to holders of the Fund's shares or to the
Adviser to which the Subadviser would otherwise be subject by reason of willful
misfeasance, bad faith or negligence on its part in the performance of its
duties or by reason of the Subadviser's reckless disregard of its obligations
and duties under this Subadvisory Agreement. As used in this Section 6, the term
"Subadviser" shall include any officers, directors, employees or other
affiliates of the Subadviser performing services for the Fund.
7. Services Not Exclusive. It is understood that, except as may
otherwise be agreed by the Adviser and the Subadviser, the services of the
Subadviser are not exclusive. The Subadviser is not required to recommend to the
Fund the same investments it recommends to its other clients. In connection with
purchases or sales of portfolio securities for the account of the Fund, neither
the Subadviser nor any of its partners officers or employees shall act as
principal or agent or receive any commission. If the Subadviser provides any
advice to its clients concerning the shares of the Fund, the Subadviser shall
act solely as investment counsel for such clients and not in any way on behalf
of the Fund.
8. Duration and Termination. This Subadvisory Agreement shall continue
in effect for a period of two years unless sooner terminated as provided herein
and shall continue automatically for successive annual periods provided that
such continuance is specifically approved at least annually by the affirmative
vote of (i) a majority of the Trustees of the Trust who are not interested
persons of the Trust (as defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval, and (ii) a majority of the
Trustees of the Trust or the holders of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act). Notwithstanding the
foregoing, this Subadvisory Agreement may be terminated: (a) at any time without
penalty by the Fund or Adviser upon the vote of a majority of the Trustees or by
vote of the majority of the Fund's outstanding voting securities (as defined in
the 1940 Act), upon sixty (60) days' written notice to the Subadviser, or (b) by
the Subadviser at any time without penalty, upon (60) days' written notice to
the Fund or Adviser. This Subadvisory Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act) or the
assignment or termination of the Investment Advisory Agreement.
9. Amendments. No provision of this Subadvisory Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by both parties, and no material amendment of this Subadvisory
Agreement shall be effective until approved by an affirmative vote of (i) a
majority of the outstanding voting securities of the Fund, and (ii) a majority
of the Trustees of the Fund, including a majority of Trustees who are not
interested persons of any party to this Subadvisory Agreement, cast in person at
a meeting called for the purpose of voting on such approval, if such approval is
required by applicable law.
10. Indemnification. (a) The Adviser hereby agrees to indemnify the
Subadviser from and against all liabilities, losses, expenses, reasonable
attorneys' fees and costs or damages (other than liabilities, losses, expenses,
attorneys fees and costs or damages arising from the Subadviser failing to meet
the standard of care required hereunder in the performance by the Subadviser of,
or its failure to perform, the services required hereunder), arising from: (i)
the Adviser's (or its affiliates' and their respective agents' and employees')
failure to perform its duties or assume its obligations hereunder, or from its
wrongful actions or omissions, including, but not limited to claims asserted or
threatened by any shareholder of the Fund, governmental or regulatory agency, or
any other person; (ii) claims arising from any wrongful act by the Fund or any
of the Fund's trustees, officers, employees, or representatives, or by the
Adviser, its officers, employees or representatives, or from any actions by the
Fund's distributors or any representative of the Fund; (iii) any action or claim
against the Subadviser based on any alleged untrue statement or misstatement of
material fact in any registration statement, prospectus, shareholder report or
other information or materials relating to the Fund or shares issued by the Fund
or any amendment thereof or supplement thereto, or the failure or alleged
failure to state therein a material fact required to be stated in order that the
statements therein are not misleading, provided that such claim is not based
upon information provided to the Adviser by the Subadviser or approved by the
Subadviser in the manner provided in paragraph 12(b) of this Agreement, or which
facts or information the Subadviser failed to provide or disclose. With respect
to any claim for which the Subadviser shall be entitled to indemnity hereunder,
the Adviser shall assume the reasonable expenses
<PAGE>
and costs (including any reasonable attorneys' fees and costs) of the
Subadviser of investigating and/or defending any claim asserted or threatened by
any party, subject always to the Adviser first receiving a written undertaking
from the Subadviser to repay any amounts paid on its behalf in the event and to
the extent of any subsequent final determination by a court that the Subadviser
was not entitled to indemnification hereunder in respect of such claim.
(b) The Subadviser hereby agrees to indemnify the Adviser, its
affiliates and the Fund from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs or damages (other than liabilities, losses,
expenses, attorneys fees and costs or damages arising from the Adviser's failure
to perform its responsibilities hereunder or claims arising from its acts or
failure to act in performing this Agreement) arising from Subadviser's or its
agents' and employees' failure to perform its duties and assume its obligations
hereunder, or from any failure of Subadviser to meet the standard of care set
forth in Section 6 of this Agreement, including any action or claim against the
Adviser based on any alleged untrue statement or misstatement of a material fact
made or provided by or with the consent of Subadviser contained in any
registration statement, prospectus, shareholder report or other information or
materials relating to the Fund or shares issued by the Fund, or the failure or
alleged failure to state a material fact therein required to be stated in order
that the statements therein are not misleading, which fact should have been made
or provided by the Subadviser to the Adviser. With respect to any claim for
which the Adviser is entitled to indemnity hereunder, the Subadviser shall
assume the reasonable expenses and costs (including any reasonable attorneys'
fees and costs) of the Adviser of investigating and/or defending any claim
asserted or threatened by any party, subject always to the Subadviser first
receiving a written undertaking from the Adviser to repay any amounts paid on
its behalf in the event and to the extent of any subsequent final determination
by a court that the Adviser was not entitled to indemnification hereunder in
respect of such claim.
(c) In the event that the Subadviser or Adviser is or becomes a
party to any action or proceedings in respect of which indemnification may be
sought hereunder, the party seeking indemnification (the "Indemnitee") shall
promptly notify the other party thereof. After becoming notified of the same,
the party from whom indemnification is sought (the "Indemnitor") shall be
entitled to participate in any such action or proceeding and shall assume any
payment for the full defense of the Indemnitee therein with counsel reasonably
satisfactory to the party seeking indemnification. The Indemnitor shall not, in
connection with any action or proceeding or separate but similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegation or circumstances, be liable for the fees or expenses of more than one
separate firm of attorneys at any time for Indemnitees. After properly assuming
the defense thereof, the Indemnitor shall not be liable hereunder to the
Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof, other than damages, if any,
by way of judgment, settlement, or otherwise pursuant to this provision. The
Indemnitor shall not be liable hereunder for any settlement of any action or
claim effected without its written consent, which consent shall not be
unreasonably withheld. The Indemnitee shall fully cooperate with the Indemnitor
in the defense of any claim and any litigation or other legal proceedings
resulting from the claim. The Indemnitee may participate in the defense of the
claim and any litigation or other legal proceedings resulting from the claim.
The Indemnitee may employ separate counsel to participate in such defense, and
the fees and expenses of such counsel shall not be at the expense of the
Indemnitee, but only if the employment thereof (a) has been specifically
authorized in writing by the Indemnitor, which authorization shall not be
unreasonably withheld and (b) relates to the defense of any claim or any
litigation or other legal proceedings resulting from the claim to the extent the
claim or any litigation or other legal proceedings resulting from the claim
seeks injunctive, specific performance or other nonmonetary relief involving or
affecting the business, operations or assets of the Indemnitee (or an Affiliate
of the Indemnitee). The provisions of this Section 10 shall survive the
termination of this Agreement.
11. Independent Contractor. Subadviser shall for all purposes of this
Agreement be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or represent
the Fund in any way or otherwise be deemed to be an agent of the Fund. Likewise,
the Fund, the Adviser and their respective affiliates, agents and employees
shall not be deemed agents of the Subadviser and shall have no authority to bind
Subadviser.
12. Use of Names. (a) The Fund may, subject to sub-clause (b) below,
use the name, "Brandes Investment Partners, L.P. ." ("Brandes") or the name of
any principal of Brandes, or any component, abbreviation or other name
<PAGE>
derived therefrom for promotional purposes only for so long as this Subadvisory
Agreement (or any extension, renewal or amendment thereof) continues in force,
unless the Subadviser or such principal shall specifically consent in writing to
such continued use thereafter. Any permitted use by the Fund during the term
hereof of the name of the Subadviser or any of its principals, or any derivative
thereof, shall in no way prevent the Subadviser or any of it shareholders or any
of their successors, from using or permitting the use of such name (whether
singly or in any combination with any other words) for, by or in connection with
an entity or enterprise other than the Fund. At the conclusion of this
Subadvisory Agreement or in the event of any termination of this Subadvisory
Agreement for any reason, each of the authorized parties and their respective
employees, representatives, affiliates, and associates agree that they shall
immediately cease using each such name and any derivatives of said names for any
purpose whatsoever.
(b) The Adviser and its affiliates on one hand, and the Subadviser
on the other, shall not publish or distribute, and the Adviser shall cause the
Fund not to publish or distribute to Fund shareholders, prospective investors,
sales agents or members of the public, any disclosure document, offering
literature (including any form of advertisement or other solicitation materials
calculated to lead investors to subscribe for and purchase shares of the Fund)
or other document referring by name to the Subadviser or its affiliates on one
hand and the Adviser or its affiliates on the other, unless the other party
shall have consented in writing to such references in the form and context in
which they appear; provided however, that where the Adviser or the Fund timely
seeks to obtain approval of the Subadviser of disclosure required to be
contained in any documents required to be filed by the Fund with any
governmental agency, and such approval is not forthcoming on or before the date
on which such documents are required by law to be filed, the Subadviser shall be
deemed to have consented to such disclosure.
13. Change in Identity. The Subadviser shall notify the
Adviser of any change in the identity or control of its general or limited
partners promptly after such change occurs.
14. Miscellaneous.
(a) This Subadvisory Agreement shall be governed by the laws of
the State of Massachusetts (without regard to principles of conflicts of law),
provided that nothing herein shall be construed in a manner inconsistent with
the 1940 Act, the Advisers Act, or rules or orders of the SEC thereunder.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed to constitute one and the same
instrument.
15. Notices. Any notice, instruction or other instrument required or
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent
by prepaid registered mail, express mail or by facsimile to the parties at such
offices or such other address as may be notified by either party from time to
time addressed to its President. Such notice, instruction or other instrument
shall be deemed to have been served, in the case of a registered letter at the
expiration of seventy-two (72) hours after posting; in the case of express mail,
within twenty-four (24) hours after dispatch; and in the case of facsimile,
immediately on dispatch; and if delivered outside normal business hours it shall
be deemed to have been received at the next time after delivery or transmission
when normal business hours commence. Evidence that the notice, instruction or
other instrument was properly addressed, stamped and put into the post shall be
conclusive evidence of posting.
16. Attorneys' Fees. In the event of a material breach of this
Agreement by any party hereto, the prevailing party, as determined by the trier
of fact, shall be entitled to reasonable attorneys' fees and costs as determined
by the court in such action, in addition to any other damages awarded.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the date and year set forth
above.
Northstar Investment Management Corporation
By:_____________________________________
Mark L. Lipson
Chairman and CEO
Brandes Investment Partners, L.P.
By:______________________________________
Charles H. Brandes
Managing Director
<PAGE>
EXHIBIT 9(A)
ADMINISTRATIVE SERVICES AGREEMENT
AS AMENDED APRIL 24, 1997
AGREEMENT made this 2nd day of May, 1994, between Northstar/NWNL Series
(the "Trust"), on behalf of Northstar Growth Fund, Northstar Income and Growth
Fund, Northstar Multi-Sector Bond Fund, Northstar High Yield Bond Fund, and
Northstar International Value Fund (the "Funds"), and Northstar Administrators
Corporation (the "Administrator").
WHEREAS, the Trust is a Massachusetts business trust authorized to
issue shares in series and is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Funds are the series of the Trust; and
WHEREAS, Northstar Investment Management Corporation (the "Adviser")
serves as investment adviser to the Funds, and the Trust wishes to retain the
Administrator to render administrative and other services to the Funds, and the
Administrator is willing to render such services to the Funds;
NOW THEREFORE, in consideration of the premises, the promises and
mutual covenants herein contained, it is agreed between the parties as follows:
1. APPOINTMENT
The Trust hereby appoints the Administrator to serve as administrator
to the Funds for the periods and on the terms set forth herein. The
Administrator accepts this appointment and agrees to furnish the services set
forth herein for the compensation provided herein.
2. SERVICES AS ADMINISTRATOR
A. GENERAL SERVICES
Subject to the supervision and direction of the Board of
Trustees of the Trust, the Administrator will (a) assist in supervising all
aspects of the Funds' operations except those performed by the Funds' Adviser
under its investment advisory agreement; (b) furnish such statistical or other
factual information, advice regarding economic factors and trends and advice and
guidelines as to transactions in specific securities (but without generally
furnishing advice or making recommendations regarding the purchase or sale of
securities); (c) maintain or supervise, as the case may be, the maintenance by
the Adviser or third parties approved by the Trust of such books and records of
the Funds as may be required by applicable federal or state law; (d) perform all
corporate secretarial functions on behalf of the Funds; (e) provide the Funds
with office facilities, assemble and provide statistical and research data,
provide data processing, clerical, internal legal, internal executive,
administrative and bookkeeping services, and provide stationary and office
supplies; (f) supervise the performance by third parties of Fund accounting and
portfolio pricing services, internal audits and audits by independent
accountants for the Funds; (g) prepare and arrange for the printing, filing and
distribution of prospectuses, proxy materials, and periodic reports to the
shareholders of the Funds as required by applicable law; (h) prepare or
supervise the preparation by third parties approved by the Trust of all federal,
state, and local tax returns and reports of the Funds required by applicable
law; (i) prepare, update, and arrange for the filing of the Funds' registration
statement and amendments thereto and other documents as the Securities and
Exchange Commission ("Commission") and other federal regulatory authorities may
require by applicable law, and
<PAGE>
oversee compliance under all state regulatory requirements to which the
Funds are subject; (j) render to the Board of Trustees of the Trust such
periodic and special reports respecting the Funds as the Board may reasonably
request; (k) arrange, assemble information and reports for, and attend meetings
of the Trustees and the shareholders of the Funds; (l) maintain a fidelity bond
as required under the 1940 Act for the Trust and liability insurance for the
Trustees and officers of the Trust; and (m) make available its officers and
employees to the Board of Trustees and officers of the Trust for consultation
and discussions regarding the administration of the Funds.
B. PERFORMANCE OF DUTIES
The Administrator, at its discretion, may enter into contracts with
third parties for the performance of the services to be provided by the
Administrator under this Agreement.
The Administrator, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Registration Statement,
as amended, of the Funds and with the instructions and directions of the Board
of Trustees of the Trust and will conform to, and comply with, the requirements
of the 1940 Act and all other applicable federal and state laws and regulations.
3. DOCUMENTS
The Trust has delivered to the Administrator copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Declaration of Trust, as amended, as filed with the
Secretary of the Commonwealth of Massachusetts;
(b) By-Laws of the Trust;
(c) Certified resolutions of the Trustees authorizing the
appointment of the Administrator and approving this Agreement on behalf of the
Trust and each Fund;
(d) Registration Statement on Form N-1A under the 1940 Act and
the Securities Act of 1933, as amended from time to time (the "Registration
Statement"), as filed with the Commission, relating to the Trust and shares of
beneficial interest of each Fund and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940
Act on Form N-8A as filed with the Commission and all amendments thereto;
(f) Prospectus and Statement of Additional Information
included in the Registration Statement, as amended from time to time. All
references to this Agreement, the Prospectus and the Statement of Additional
Information shall be to such documents as most recently amended or supplemented
and in effect.
4. DIRECTORS, OFFICERS AND EMPLOYEES
The Administrator shall authorize and permit any of its directors,
officers and employees who may be elected as trustees or officers of the Trust
and/or the Funds to serve in the capacities in which they are
<PAGE>
elected. All services to be furnished by the Administrator under this Agreement
may be furnished through such directors, officers or employees of the
Administrator.
5. RECORDS
The Administrator agrees that all records which it maintains for the
Trust and/or the Funds are property of the Trust and/or the Funds. The
Administrator will surrender promptly to the Trust and/or the Funds any such
records upon either the Trust's or the Fund's request. The Administrator further
agrees to preserve such records for the periods prescribed in Rule 31a-2 of the
Commission under the 1940 Act.
6. COMPENSATION
In consideration of the services rendered pursuant to this Agreement,
the Funds will pay the Administrator a fee, computed and accrued daily and
payable monthly, at an annual rate of 0.10% of each Fund's average daily net
assets. For the purpose of determining fees payable to the Administrator, the
value of a Fund's average daily net assets shall be computed at the times and in
the manner specified in the Prospectus and Statement of Additional Information
of the Fund as from time to time in effect.
7. EXPENSES
The Administrator will bear all expenses in connection with the
performance of its services under this Agreement, except that the Administrator
will be reimbursed by the Funds for the out-of-pocket costs incurred in
connection with this Agreement or by third parties who are performing services
as permitted by paragraph 2. The Funds will bear certain other expenses to be
incurred in their operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of Trustees of the Trust who are not officers,
directors, or employees of the Adviser or Administrator; Securities and Exchange
Commission fees; charges of custodians and transfer and dividend disbursing
agents; certain insurance premiums; outside auditing and legal expenses; cost of
maintenance of the Funds' existence; charges of accounting, internal auditing,
and pricing of portfolio securities for the Funds, including the charges of an
independent pricing service; costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders; costs of shareholders' reports and
meetings of the shareholders of the Funds and of the officers or Board of
Trustees of the Trust; and any extraordinary expenses.
8. STANDARD OF CARE
The Administrator shall exercise its best judgment in rendering the
services under this Agreement. The Administrator shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Funds or the
Funds' shareholders in connection with the matters to which this Agreement
relates, provided that nothing herein shall be deemed to protect or purport to
protect the Administrator against liability to the Funds or to their
shareholders to which the Administrator would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of its Administrator's reckless disregard
of its obligations and duties under this Agreement. As used in this Section 9,
the term "Administrator" shall include any officers, directors, employees, or
other affiliates of the Administrator performing services with respect to the
Funds.
<PAGE>
9. DURATION AND TERMINATION
This Agreement shall continue in effect unless sooner terminated as
provided herein, for two years from the date hereof and shall continue from year
to year thereafter, provided each continuance is specifically approved at least
annually by a majority of the Board of Trustees of the Trust, including a
majority of the Board of Trustees who are not "interested persons" (as defined
in the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting such approval. This Agreement is
terminable, without penalty, on 60 days' written notice by the Board of Trustees
of the Trust or by vote of holders of a majority of the Funds' shares, or upon
90 days' written notice by the Administrator.
10. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The administrative services of the Administrator to the Funds under
this Agreement are not to be deemed exclusive, and the Administrator, or any
affiliate thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of the Funds) and to engage in other activities,
so long as it services hereunder are not impaired thereby.
11. ASSIGNMENT
This Agreement may be assigned by either party only upon the prior
written consent of the other party.
12. MISCELLANEOUS
(a) This Agreement constitutes the full and complete agreement
of the parties hereto with respect to the subject matter hereof.
(b) Titles or captions of Sections contained in this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
(c) This Agreement may be executed in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all the parties.
(d) This Agreement and the rights and obligations of the
parties hereunder shall be governed by, and interpreted, construed and enforced
in accordance with the laws of the State of Connecticut.
(e) If any provisions of this Agreement or the application
thereof to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision to such person
or circumstance, other than those as to which it is so determined to be invalid
or unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Administrator by
the Trust shall be in writing and shall be duly given if mailed or delivered to
the Administrator at Two Pickwick Plaza,
<PAGE>
Greenwich, Connecticut 06830, or at such other address or to such individual as
shall be specified by the Administrator to the Trust. Notices of any kind to be
given to the Trust by the Administrator shall be in writing and shall be duly
given if mailed or delivered to Two Pickwick Plaza, Greenwich, Connecticut
06830, or at such other address or to such individual as shall be specified by
the Trust to the Administrator.
(g) The Administrator, the Trust and the Funds each agree that
the name "Northstar" is proprietary to, and a property right of, the
Administrator. The Trust and the Funds agree and consent that (i) each will only
use the name "Northstar" as part of its name and for no other purpose, (ii) each
will not purport to grant any third party the right to use the name "Northstar"
and (iii) upon the termination of this Agreement, the Trust and the Funds shall,
upon the request of the Administrator, cease to use the name "Northstar," and
shall use its best efforts to cause its officers, trustees and shareholders to
take any and all actions which the Administrator may request to effect the
foregoing.
(h) The Declaration of Trust, establishing the Trust, dated
December 8, 1993, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Northstar/NWNL Trust" refers to the
Trustees under the Declaration collectively as trustees, but not individually or
personally; and no Trustee, shareholder, officer, employee or agent of the Trust
and/or the Funds may be held to any personal liability, nor may resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Trust, but the Trust property
only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below on the day and year first above
written.
NORTHSTAR VARIABLE TRUST
By: ____________________________________
President
NORTHSTAR ADMINISTRATORS
CORPORATION
By:____________________________________
Senior Vice President
<PAGE>
LAW OFFICES OF
DECHERT PRICE & RHOADS
May 16, 1997
Northstar Variable Trust
Two Pickwick Plaza
Greenwich, Connecticut 06830
Ladies and Gentlemen:
As counsel to the Northstar International Value Fund (the "Fund"), a
series of the Northstar Variable Trust (the "Trust"), we are familiar with the
Trust's registration under the Investment Company Act of 1940 and with the
registration statement relating to its shares of beneficial interest under the
Securities Act of 1933 (File No. 33-73140) (the "Registration Statement"). We
have also examined such other trust records, agreements, documents and
instruments as we deemed appropriate.
On the basis of the foregoing, we are of the opinion that the shares of
beneficial interest of the Trust being registered under the Securities Act
of 1933 in the Registration Statement will be legally and validly issued,
fully paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion with and as part of the
Registration Statement.
Very truly yours,
(Signature of Dechert Price & Rhoads)
<PAGE>
