SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Commission Only (as permitted
by Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
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( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Northstar Galaxy Trust
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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( ) Check box if any part of the fee is offset as provided by Exchange Act
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number, or the Form or Schedule and the date of its filing.
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4) Date Filed:
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NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
A Series of the Northstar Galaxy Trust
300 FIRST STAMFORD PLACE, STAMFORD, CONNECTICUT 06902
March 1, 1999
Dear Shareholder:
The Board of Trustees of the Northstar Galaxy Trust, on behalf of the
Northstar Multi-Sector Bond Portfolio (the "Portfolio"), has recently reviewed
and unanimously endorsed two proposals -- modification of the investment
objective and name of the Portfolio and approval of a subadvisory agreement --
which they judge to be in the best interests of the Portfolio and its
shareholders.
We therefore have called a Special Meeting of Shareholders of the
Portfolio to be held on April 1, 1999 to consider and approve this modification
whereby the current objective of seeking to maximize current income consistent
with the preservation of capital would be modified to the objective of seeking
capital appreciation. If the modification is approved, the Portfolio's name will
be changed to "Northstar Galaxy Trust Research Enhanced Index Portfolio" to
better reflect the Portfolio's investment objective and holdings. Further, you
are being asked to consider and approve a subadvisory agreement (the
"Subadvisory Agreement") between Northstar Investment Management Corporation
("Northstar" or the "Adviser") and J.P. Morgan Investment Management Inc. ("J.P.
Morgan" or the "Subadvisor"). As is discussed in the enclosed proxy statement,
the modifications are intended to enhance the Portfolio's ability to achieve
better long-term performance results. The modifications will not affect the fees
of the Portfolio; they will remain the same.
Detailed information about the proposed modification of the investment
objective approval of the Subadvisory Agreement and the reasons for these
proposals are contained in the enclosed materials. Please exercise your right to
vote by completing, dating and signing the enclosed proxy card. A
self-addressed, postage-paid envelope has been enclosed for your convenience. It
is very important that you vote and that your voting instructions be received by
no later than April 1, 1999.
We appreciate your participation and prompt response in this matter, and
thank you for your continued support.
Sincerely,
/s/ Mark L. Lipson
----------------------------
Mark L. Lipson
President
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NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
A Series of the Northstar Galaxy Trust
300 FIRST STAMFORD PLACE, STAMFORD, CONNECTICUT 06902
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be Held on April 8, 1999
To the Shareholders of Northstar Multi-Sector Bond Portfolio:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Northstar Multi-Sector Bond Portfolio (the "Portfolio"), a
series of the Northstar Galaxy Trust, a Massachusetts business trust, will be
held at the offices of Northstar Investment Management Corporation on April 8,
1999, at 10:00 a.m. Eastern Time, or at such adjourned time as may be necessary
for the holders of a majority of the shares of the Portfolio to vote, for the
following purposes:
(1) To modify the investment objective and name of the Portfolio,
(2) To approve a subadvisory agreement and
(3) To transact such other business as may properly come before the
Special Meeting.
The Trustees of the Trust have fixed the close of business on February 18,
1999 as the record date for determining shareholders entitled to notice of and
to vote at the Meeting or any adjournment thereof.
By Order of the Trustees,
/s/ Stephanie L. Beckner
------------------------------------
Stephanie L. Beckner
Secretary
Stamford, Connecticut
March 1, 1999
Shareholders are urged to vote promptly on this matter. Shareholders who
do not expect to attend the Meeting in person are requested to complete, date
and sign the enclosed form of proxy and return it promptly in the envelope
provided for that purpose. Shareholders who hold shares in more than one account
will receive a proxy package for each account. You must return separate proxy
cards for each separate account.
The prompt return of your proxy will avoid the expense of further
mailings.
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NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
PROXY STATEMENT
SPECIAL MEETING OF THE SHAREHOLDERS
TO BE HELD ON APRIL 8, 1999
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This proxy statement is being furnished in connection with the
solicitation of proxies by Northstar Multi-Sector Bond Portfolio (the
"Portfolio") for the Special Meeting of Shareholders to be held on April 8,
1999, or any adjournment thereof. The Portfolio is a series of the Northstar
Galaxy Trust (the "Trust"), an open end management investment company comprised
of five portfolios that are offered to insurance company separate accounts
("Variable Accounts") which serve as investment vehicles for variable annuity
and variable life products (collectively "Variable Contracts") issued by
ReliaStar Life Insurance Company, Northern Life Insurance Company and ReliaStar
Life Insurance Company of New York. At the Special Meeting, Shareholders of the
Portfolio will be asked to approve a modification of the investment objective
and name of the Portfolio and a subadvisory agreement. The terms of the
investment objective and subadvisory agreement, as well as the purposes for the
proposals are set forth herein. It is anticipated that the first mailing to
shareholders of proxies and proxy statements will be on or about March 1, 1999.
In accordance with current law, the Affiliated Insurance Companies will request
voting instructions from the owners of the Variable Contracts ("Variable
Contract Owners") and will vote shares or other voting interests in the separate
account in proportion to the voting instructions received. Each Affiliated
Insurance Company is required to vote shares of the Portfolio held by its
Variable Accounts in accordance with instructions received from Variable
Contract Owners. Each Affiliated Insurance Company is also required to vote
shares of the Portfolio held in each of their respective Variable Accounts for
which no voting instructions have been received in the same proportion as it
votes shares held by that Variable Account for which it has received
instructions. Shares held by an Affiliated Insurance Company in its general
account, if any, must be voted in the same proportion as the votes cast with
respect to shares held in all of such Company's Variable Accounts in the
aggregate. Variable Contract Owners permitted to give instructions to the
Portfolio and the number of shares for which such instructions may be given for
purposes of voting at the Meeting, and any adjournment thereof will be
determined as of the record date. In connection with the solicitation of such
instructions from Variable Contract Owners, it is expected that the Affiliated
Insurance Companies will furnish a copy of this Proxy Statement to Variable
Contract Owners.
Adoption of the modification to the Portfolio's investment objective and
the Subadvisory Agreement is subject to approval of at least a majority of the
shareholders of the Portfolio (as defined in the Investment Company Act of 1940,
as amended (the "1940 Act")). The Trustees of the Trust, on behalf of the
Portfolio have reviewed the proposed modification of investment objective and
the Subadvisory Agreement, and, having found each to be in the best interest of
the Portfolio and its shareholders, unanimously recommend that shareholders
approve the proposed modification of investment objective and the Subadvisory
Agreement.
February 18, 1999 has been chosen as the record date to determine
shareholders entitled to vote at the Meeting. Shareholders are entitled to one
vote for each share held, which may be cast by proxy or by personally appearing
at the Meeting. At the close of business on February 18, 1999 (Record Date),
there were ___________ shares of the Portfolio outstanding, of which the
Trustees and officers of the Portfolio as a group beneficially owned less than
1%. ReliaStar Financial
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Corporation, the ultimate parent company of Northstar Investment Management
Corporation ("Northstar" or the "Adviser"), directly or through its Affiliated
Insurance Companies owns beneficially 100% of the outstanding shares of the
Portfolio. No other person was known by management of the Portfolio to own
beneficially 5% or more of the outstanding shares of the Portfolio on that date.
The enclosed form of proxy, if properly executed and returned, will be
voted in accordance with the instructions specified thereon. If no choice is
specified, the proxy will be voted FOR the proposed modification of investment
objective and name of the Portfolio and Subadvisory Agreement, and, in the
discretion of the proxies named on the proxy card, on any other matter properly
brought before the Meeting. Shares represented in person or by proxy (including
shares which abstain or do not vote with respect to one or more proposals
presented for shareholder approval, including "broker non-votes") will be
counted for purposes of determining the number of shares that are present and
are entitled to vote with respect to any particular proposal, but will not be
counted as a vote in favor of such proposal. Accordingly, an abstention from
voting on a proposal or a broker non-vote will have the same legal effect as a
vote against the proposal. "Broker non-votes" exist where a proxy received from
a broker indicates that the broker does not have discretionary authority to vote
the shares on the matter.
The enclosed proxy is revocable by you at any time prior to the exercise
thereof by submitting a written notice of revocation or a subsequently executed
proxy. Signing and mailing the proxy will not affect your right to give a later
proxy or to attend the Meeting and vote your shares in person.
In the event that a quorum is present at the Meeting but sufficient votes
to approve the proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a majority
of those shares represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the proposals in favor of such an adjournment and will vote
those proxies required to be voted AGAINST the proposals against any such
adjournment. A shareholder vote may be taken on the proposals in this proxy
statement prior to any such adjournment if sufficient votes have been received
for approval.
The costs of soliciting proxies in the accompanying form for the Special
Meeting, including the cost of preparing, printing and mailing the accompanying
Notice of Special Meeting, the President's letter and this proxy statement and
the costs of the Special Meeting will be borne by the Portfolio. Proxy material
will also be distributed through brokers, custodians and nominees to beneficial
owners, and the Portfolio will reimburse such parties for reasonable charges and
expenses. In addition to the use of the mails, proxies may be solicited by
telephone or telegraph by officers and Trustees of the Trust, on behalf of the
Portfolio, or their agents, on behalf of the Trustees of the Trust, expenses of
which shall be charged to the Portfolio. The Portfolio has not retained a proxy
solicitor. It may, however, retain Shareholder Communications Corporation
("SCC"), a proxy soliciting firm, to assist with proxy soliciting activities to
obtain the necessary shareholder representation. If retained, SCC would charge a
fee of approximately $2,000 plus expenses for a solicitation of this size, and
would contact shareholders to ask if they would be willing to have their votes
recorded by telephone. Although each shareholder will receive a copy of this
proxy statement and may vote by mail using the enclosed proxy card(s),
shareholder's vote may be taken by telephone by SCC, subject to procedures
designed to authenticate shareholders' identities and to confirm voting
instructions. Copies of the Portfolio's most recent annual report will be
furnished to shareholders without charge, upon request to Northstar at (800)
595-7827.
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PROPOSAL ONE: APPROVAL OF PROPOSED MODIFICATION OF INVESTMENT
OBJECTIVE AND PROPOSED MODIFICATION OF PORTFOLIO NAME OF THE
NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
Introduction
On January 22, 1999, a majority of the independent Trustees of the Trust,
on behalf of the Portfolio (as defined in the 1940 Act), and a majority of the
entire Board of Trustees met in person and unanimously approved, subject to the
required shareholder approval described herein, a modification of investment
objective of the Portfolio, and recommended approval of the proposed
modification of investment objective of the Portfolio by shareholders of the
Portfolio.
Currently the Portfolio's investment objective is to "maximize current
income consistent with the preservation of capital." The Board of Trustees
recommends that the objective be modified so that the Portfolio's objective
would be to "seek long-term capital appreciation." The Portfolio will seek to
achieve this objective by investing in a diversified portfolio of equity
securities. The Portfolio's investment adviser, Northstar Investment Management,
has recommended the revision in the investment objective because it believes it
can achieve superior investment returns if the Portfolio is managed with a view
to obtaining long-term capital appreciation. The Portfolio has, since its
establishment, remained small, failing to attract new assets. Although the
reasons for this are not entirely clear, bond funds generally have not been as
popular with investors, in the recent years, as have equity funds. The equity
markets have generally outperformed the bond markets during this period. This,
of course, may not always be true. If shareholders do approve the proposed
investment objective, this Portfolio will change its name to the "Northstar
Galaxy Trust Research Enhanced Index Portfolio" and will change its investment
strategy and the nature or type of securities in which the Portfolio may invest
as noted below.
The modification in the Portfolio's investment objective will enable the
Portfolio to modify its investment strategy so that the Portfolio will invest
primarily in the equity securities of companies contained in the S&P 500 Index.
Based on extensive research regarding projected company earnings and dividends,
the Subadviser's valuation model will rank companies in each industry group
according to their relative value. Using this valuation model, the portfolio
managers select stocks for the fund. Within each industry the fund modestly
overweights stocks that are ranked as undervalued or fairly valued while
modestly underweighting or not holding stocks that appear overvalued. Industry
by industry, the fund's assets are invested so that the fund's industry sector
allocations and market cap weightings closely parallel those of the S&P 500
Index.
By owning a large number of stocks within the S&P 500, with an emphasis on
those that appear undervalued or fairly valued, and by tracking the industry
weightings and other characteristics of that index, the fund seeks returns that
modestly exceed those of the S&P 500 over the long term with virtually the same
level of volatility. Equity securities are, of course, subject to the risk of
loss, and the performance of the S&P 500 Index may not continue to be as strong
as it has been in recent years. Although bond prices move up and down with
changes in interest rates or because of other factors, equity securities may be
more volatile during some market conditions.
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Under normal market conditions, the fund will invest at least 80% of its
total assets in common stocks included in the S&P 500 Index. It may also invest
in other common stocks not included in the Index and engage in other investment
practices.
The proposed investment objective, if approved by vote of the holders of a
majority of the outstanding shares of the Portfolio (as defined in the 1940
Act), will go into effect on April 30, 1999. In the event that shareholders of
the Portfolio do not approve the proposed modification of investment objective
of the Portfolio, the investment objective would remain the same, and the
Trustees of the Portfolio may consider other possible courses of action to
accomplish the purposes for which the Proposal has been made, subject, as
required, to approval by the shareholders of the Portfolio.
Vote Required for Approval
Adoption of the proposed modification of investment objective set forth
herein requires the approval by (a) 67% or more of the voting securities present
at the Special Meeting of the Portfolio's shareholders, if the holders of more
than 50% of the Portfolio's outstanding voting securities are present or
represented by proxy; or (b) more than 50% of the Portfolio's outstanding voting
securities, whichever is less.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE PORTFOLIO VOTE
TO APPROVE THE MODIFICATION OF INVESTMENT OBJECTIVE AND NAME OF THE PORTFOLIO.
PROPOSAL TWO: APPROVAL OR DISAPPROVAL OF THE
SUBADVISORY AGREEMENT
Introduction
On January 22, 1999, a majority of the Trustees of the Trust who are not
parties to such agreement or interested persons (as defined in the 1940 Act) of
any such party (the "Independent Trustees"), and a majority of the entire Board
of Trustees met in person and approved, subject to the required shareholder
approval described herein, the Subadvisory Agreement and recommended approval of
the Subadvisory Agreement by shareholders of the Portfolio. The form of the
Subadvisory Agreement is attached to this proxy statement as Exhibit A.
The Subadvisory Agreement, if approved by vote of the holders of a
majority of the outstanding shares of the Portfolio (as defined in the 1940
Act), will become effective on or about April 30, 1999, and will continue in
effect for an initial term of two years. Thereafter, the Subadvisory Agreement
will continue in effect from year to year, subject to approval annually by the
Trustees of the Portfolio or vote of the holders of a majority of the
outstanding shares of the Portfolio (as defined in the 1940 Act), and also, in
either event, to approval by a majority of the Independent Trustees. For this
purpose, the vote of the holders of a majority of the outstanding shares of the
Portfolio means the lesser of either (i) the vote of 67% or more of the shares
of the Portfolio present at the Meeting if the holders of more than 50% of the
outstanding Portfolio shares are present or represented by proxy or (ii) the
vote of the holders of more than 50% of the outstanding shares of the Portfolio
("1940 Act Majority"). In the event that shareholders of the Portfolio do not
approve the Subadvisory Agreement for the Portfolio, Northstar would continue
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to serve as Adviser to the Portfolio without the services of the Subadviser, and
the Trustees of the Portfolio may consider other possible courses of action to
accomplish the purposes for which the Proposal has been made, subject, as
required, to approval by the shareholders of the Portfolio.
THE TRUSTEES OF THE PORTFOLIO BELIEVE THAT THE SUBADVISORY AGREEMENT
BETWEEN NORTHSTAR AND THE SUBADVISER IS IN THE BEST INTEREST OF THE PORTFOLIO
AND ITS SHAREHOLDERS AND, ACCORDINGLY, HAVE APPROVED THE SUBADVISORY AGREEMENT
AND RECOMMEND THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
Background and Reasons for the Proposed Arrangement
The Portfolio commenced operations on May 6, 1994, and pursuant to an
investment advisory agreement with the Portfolio dated May 2, 1994 ("the
Agreement"), Northstar Investment Management Corp. began managing the Fund's
portfolio investments. The Agreement remained in effect for a period of two
years and thereafter was renewed for a period of one year for each of the
following years. The last renewal of the Agreement was on April 30, 1998. Unless
sooner terminated in accordance with its terms, the Agreement may continue to be
renewed from year to year, provided that its continuation is specifically
approved at least annually: (a) by a vote of the majority of the outstanding
shares of the Portfolio or by its Trustees, and (b) by a vote of a majority of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval. Pursuant to the Agreement and subject to the direction
of the Trustees, Northstar manages the investment operations of the Portfolio.
In discharging its responsibilities, the Adviser may recommend retaining, and
with the approval of the Portfolio retain, one or more subadvisers to perform
all or a part of the advisory function. A subadviser, if one be selected and
approved, would be subject to the supervision of the Adviser and of the Trustees
of the Trust, on behalf of the Portfolio.
At a regular meeting of the Trustees, Northstar recommended that the
Trustees consider and approve using a subadviser, J.P. Morgan Investment
Management Inc. This recommendation was based upon a number of considerations,
including the additional technical expertise that a qualified subadviser could
offer to the Portfolio with the goal of achieving enhanced investment
performance. Northstar noted that it had reviewed the credentials of J.P.
Morgan, which it deemed most qualified to provide advisory services to the
Portfolio in light of J.P. Morgan's investment experience and technical
expertise, the proposed investment objective of the Portfolio, the Adviser's
performance goals for the Portfolio, and the cost of J.P. Morgan's services.
Northstar believed that the application of J.P. Morgan's investment philosophy
in pursuing the Portfolio's proposed objective, the resources of the firm, and
J.P. Morgan's reputation and strong performance record managing structured
equity portfolios would benefit the Portfolio and its shareholders.
After review of relevant information relating to the Subadviser and the
terms of the proposed subadvisory arrangement, the Trustees concluded that
entering into the Subadvisory Agreement would be in the best interests of the
Portfolio and its shareholders. In considering the Subadvisory Agreement, the
Trustees evaluated, as set forth more fully below, materials furnished by
Northstar and J.P. Morgan, J.P. Morgan's experience in providing various
investment services to individuals and institutions, the depth of its
operations, as well as the
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firm's reputation, integrity, and financial resources. Among other things, the
Trustees also considered the demonstrated skills and capabilities of Northstar's
current management, its resources and facilities, and the fact that Northstar
would be responsible for overseeing and monitoring provision of quality
investment management services to the Portfolio. The Trustees also concluded
that the advisory services to the Portfolio could be enhanced by the investment
and research methods and resources offered by J.P. Morgan. After reviewing and
considering the information and data presented, the Trustees concluded that
approval of the Subadvisory Agreement would offer a reasonable prospect of
enhancing the Portfolio's performance by making available to it additional
investment and technical resources at no additional cost to the Portfolio and
its shareholders.
Evaluation by the Trustees
The terms of the new Subadvisory Agreement were reviewed by the Trustees,
including the Independent Trustees, at a Regular Meeting held on January 22,
1999. In considering whether to approve the Subadvisory Agreement and to submit
it to shareholders for their approval, the Trustees considered a number of
factors. Initially, the Trustees reviewed the Adviser's reasons for proposing
the subadvisory arrangement, including, in particular, the investment
performance of the Portfolio and the fact that the Portfolio's assets had not
increased substantially since inception of the Portfolio's operations. It was
noted that retaining the services of the Subadviser could enhance the
Portfolio's performance and assist in attracting and maintaining investors in
the Portfolio. Based upon information presented by Northstar, the Trustees
concluded that utilizing the resources of a qualified investment advisory firm
that specializes in the proposed equity investments of the Portfolio was, under
all the circumstances in the best interest of the Portfolio. In this context, it
was noted that all fees associated with retaining a subadviser would be borne
solely by Northstar, so that the Portfolio would incur no additional advisory
expense as a result of the arrangement. The Trustees considered the services and
qualifications of the Subadviser. Specifically, the Trustees considered (1) the
J.P. Morgan organization, including its corporate structure, financial
resources, and the credentials of the firm's investment, research and technical
personnel; (2) the range of services to be provided by the Subadviser, its
research and technical capabilities, and skills and capabilities of its staff to
provide investment and related services; and (3) the nature of its advisory
services and the nature of the clients served by the firm. The Trustees also
considered the level of the fee to be paid to the Subadviser and the respective
responsibilities of the Subadviser and the Adviser to the Portfolio under the
subadvisory arrangement. Finally, the Trustees considered performance data
previously supplied by the Subadviser.
Terms of the Subadvisory Agreement
The Subadvisory Agreement delegates to the Subadviser responsibility for
the management of the Portfolio's assets, with full discretion, consistent with
the Portfolio's investment objective. Accordingly, J.P. Morgan will be
responsible for selecting investments for purchase, and determining the timing
for the purchase and sale by the Portfolio of its investments. Northstar, as
Adviser, will be responsible for overseeing the advisory services of the
Subadviser and monitoring the operations and compliance functions applicable to
investments in the Portfolio. The Adviser and the Subadviser will be subject to
the overall supervision of the Portfolio's Trustees.
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The Subadvisory Agreement provides that Northstar, at its own expense,
will pay the Subadviser an annual fee. Accordingly, the Subadvisory Agreement
will not increase the fees paid by the Portfolio for investment advisory
services. The Subadviser will be paid an annual fee equal to 0.20 of 1% of the
average daily net assets of the Portfolio. This fee is calculated and accrued
daily and paid to the Subadviser monthly. The annual advisory fee paid by the
Portfolio to Northstar is 0.75% of the average daily net assets of the
Portfolio.
The Subadvisory Agreement provides that the Subadviser shall exercise its
best judgment in rendering its services thereunder. The Subadviser shall not be
liable to the Portfolio and its shareholders for its acts or omissions in
rendering the services to be provided under the Subadvisory Agreement except for
damages arising from or resulting by reason of the Subadviser's willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of the Subadviser's reckless disregard of its obligations and duties
under the Subadvisory Agreement.
J.P. Morgan Investment Management Inc.
J.P. Morgan Investment Management Inc. is registered as an investment
adviser under the Investment Advisers Act of 1940. J.P. Morgan's principal
address is 522 Fifth Avenue, New York, New York 10036. The firm was formed in
1984. The firm evolved from the Trust and Investment Division of Morgan Guaranty
Trust Company which acquired its first tax-exempt client in 1913 and its first
pension account in 1940. The firm is a wholly-owned subsidiary of J.P. Morgan &
Co. Incorporated. The Subadviser is a Delaware corporation. The Subadviser
currently manages over $300 billion of assets for institutions, pension funds
and individuals. The Subadviser also currently manages over $77 million in a
series of the Phoenix Edge Series Fund (the "Fund"), an open-end diversified
investement management company. The Fund was organized as a business trust under
the laws of Massachusetts on February 25, 1998, and is comprised at present of
nine series; the JPMResearch Enhanced Index Series (the "Series") is a series of
the Fund. The Subadviser receives an annual fee of 0.25% of 1% on the first $100
million of average daily net assets of the Series, and 0.20% of 1% for the net
assets of the Series in excess of $100 milion. The Series seeks high total
return by investing in a broadly diversified portfolio of equity securities of
large and medium capitalization companies within market sectors reflected in the
S&P 500 Index.
At December 31, 1998, J.P. Morgan employed over 300 research analysts and
portfolio managers worldwide. The team of analysts dedicated to U.S. equities
includes more than 20 members with an average of over 10 years of experience.
Messrs. Timothy Devlin and James Wiess will serve as co-managers of the
Portfolio and as such, will be the persons primarily responsible for the
day-to-day investment management of the Portfolio. Mr. Devlin serves as a
Portfolio Manager and member of the Structured Equity Group at J.P. Morgan. He
has over 12 years of investment management experience. Before joining J.P.
Morgan Investment Management in 1996, Mr. Devlin was a Portfolio Manager for
nine years at Mitchell Hutchins Asset Management, Inc. where he managed
quantitatively-driven portfolios for institutional and retail investors. Mr.
Wiess serves as a Portfolio Manager and member of the Sructured Equity Group at
J.P. Morgan with the responsibility of portfolio rebalancing and research and
development of structured equities strategies. Mr. Wiess has over 16 years of
investment management experience. Before joining J.P. Morgan in 1992, Mr. Wiess
was a stock index arbitrager for seven years at Oppenheimer & Co. and a
consultant for Data Resources.
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The Subadviser's directors and principal executive officers are listed
below. Unless otherwise noted, the business address of each person is at the
principal address of the Subadviser.
Name Position at J.P Morgan
- --------------------- ------------------------------
Keith M. Schappert President; Chairman, Director;
Managing Director*
Jeff M. Garrity Director; Managing Director*
Isabel H. Sloane Director; Managing Director*
Kenneth W. Anderson Director; Managing Director*
Gilbert Van Hassel Director; Managing Director*
Akasaka Park Building
2-20, Akasaka 5-chome
Minato-ku, Tokyo, Japan
Hendrik Van Riel Director; Managing Director*
28 King Street
London, England SW1Y 6XA
John W. Schmidlin Director
345 Park Avenue
New York, New York 10154
- ----------
* Managing Director is an officer's title, and those who hold it are not
neccessarily directors of J.P. Morgan.
If the New Subadvisory Agreement is approved by shareholders of the
Portfolio, it is expected that it will be executed and become effective on or
about April 30, 1999. The Subadvisory Agreement may be terminated without
payment of any penalty by the Portfolio or Adviser upon the vote of a majority
of the Trustees or by vote of the majority of the Portfolio's outstanding voting
securities, upon sixty (60) days' written notice to the Subadviser, or by the
Subadviser without cause, at any time without penalty, upon sixty (60) days'
written notice to the Portfolio or Adviser. Otherwise, the Subadvisory Agreement
will remain in effect for two years and thereafter will continue in effect from
year to year, provided that such continuation is approved annually by the
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio, and by the vote, cast in person at a meeting duly
called and held, of a majority of the Trustees of the Portfolio who are not
parties to the Subadvisory Agreement or "interested persons" (as defined in the
1940 Act) of any such party. The Subadvisory Agreement will automatically
terminate in the event of its assignment (as defined in the 1940 Act) or the
assignment or termination of the Agreement.
Vote Required For Approval
Adoption of the Subadvisory Agreement set forth herein requires the
approval by a 1940 Act Majority of the Portfolio's outstanding voting
securities.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE PORTFOLIO VOTE
TO APPROVE THE SUBADVISORY AGREEMENT.
Additional Information About the Adviser
Northstar currently serves as the investment adviser to the Portfolio
pursuant to the Agreement. The Adviser's principal offices are located at 300
First Stamford Place, Stamford, Connecticut 06902. Northstar was organized in
July of 1993 as a Delaware corporation.
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<PAGE>
Northstar, and its affiliated companies, Northstar Administrators Corp., the
Fund's administrator, and Northstar Distributors, Inc., that serves as
distributor for ReliaStar Life Insurance Company and Affiliated Insurance
Company variable annuity products (products offered by ReliaStar Life Insurance
Company and other Affiliated Insurance Companies through which the Portfolio is
made available as an investment option), are indirect, wholly-owned subsidiaries
of ReliaStar Financial Corp. ("ReliaStar"). ReliaStar is a New York Stock
Exchange listed company, with over $20 billion in assets, and over $____ billion
in shareholders' equity as of December 31, 1998. ReliaStar, through its
subsidiaries, specializes in the life and health insurance businesses, issuing
and distributing individual life insurance, annuities and mutual funds, group
life and health insurance and life and health reinsurance, and provides related
investment management services.
Northstar registered with the Securities and Exchange Commission under the
Investment Advisers Act of 1940 in August of 1993, and began advising mutual
funds in November of 1993. In addition to serving as investment adviser to the
Trust, an open end management investment company comprised of five portfolios
that serve as underlying investment vehicles for variable products issued
through the Affiliated Insurance Companies, Northstar advises the Northstar
Trust (formerly the "Northstar Advantage Trust"), comprised of the Northstar
Growth + Value, Research Enhanced Index, International Value, Emerging Markets
Value, High Total Return Fund and High Total Return Fund II Funds; the Northstar
Equity Trust, comprised of the Northstar Mid-Cap Growth Fund; and the Northstar
Special, Growth, High Yield, Government Securities and Balance Sheet
Opportunities Funds. Northstar also serves as investment adviser to several
private accounts and three Collaterlized Bond Obligations. Northstar's total
assets under management were in excess of $4 billion as of December 31, 1998.
Northstar Administrators Corp., an affiliate of the Adviser, serves as
administrator for the Portfolio pursuant to an Administrative Services Agreement
entered into between the administrator and the Portfolio dated May 2, 1994. The
administrator provides the overall business management and administrative
services necessary to the proper conduct of the Portfolio's business, except for
those services performed by the Portfolio's Adviser and except for services
provided by other service providers to the Portfolio pursuant to separate
service contracts, for which the Administrator acts as liaison. For its
services, the Administrator is compensated at the annual rate of 0.10 of 1% of
the Portfolio's average daily net assets.
Northstar Distributors Inc., ("Distributors") also an affiliate of the
Adviser, serves as Distributor for the ReliaStar Life Insurance Company and
Affiliated Insurance Company variable annuity products, products through which
the Portfolio is offered as an investment option. Pursuant to this Distribution
Agreement with ReliaStar Life Insurance Company, Northstar Distributors receives
a commission based upon sales of annuity contracts through participating
brokers. For its services during the fiscal year 1998, Distributors received
commissions totaling $________.
Terms of the Northstar Investment Advisory Agreement with the Portfolio.
Pursuant to the Agreement, the Adviser, at its expense, offers the
Portfolio advice and assistance with respect to the selection, acquisition,
holding and disposal of securities, maintains all books and records required
under the 1940 Act to the extent not maintained by the Portfolio's
9
<PAGE>
custodian and will render to the Trustees such periodic and special reports as
the Trustees may reasonably request. Northstar pays the salary and expenses of
all personnel of the Portfolio and Northstar required to perform the services
under the Agreement and all expenses incurred by Northstar and the Portfolio in
connection with the performance of Northstar's responsibilities under the
Agreement. The Portfolio bears all other expenses incurred in the operation of
the Portfolio, including interest charges, taxes, fees and commissions of every
kind, expenses of issue, sale, repurchase or redemption of shares, expenses of
registering or qualifying shares for sale, all charges of custodians (including
sums as custodian and for keeping books, performing portfolio valuations and
rendering other services to the Portfolio), transfer agents, permits,
registrars, auditors and legal counsel, expenses of preparing, printing and
distributing to shareholders prospectuses, reports and notices to shareholders,
and all costs incident to the Portfolio's organization and existence.
For its services, Northstar is compensated at an annual rate of 0.75% of
the Portfolio's average daily net assets. This fee is higher than the fees paid
by most mutual funds, but the Trustees believe that these fees are warranted by
the resources needed to evaluate the particular securities in which the
Portfolio invests.
The Agreement provides that the Adviser is not liable for any act or
omission in the course of or in connection with rendering services thereunder in
the absence of willful misfeasance, bad faith, or gross negligence in fulfilling
its obligations or duties. The Agreement permits the Adviser to render services
to others and to engage in other activities.
The Agreement provides for its automatic termination in the event of its
assignment (as defined in the 1940 Act) or may be terminated at any time without
payment of any penalty upon no more than 60 nor less than 30 days' written
notice by Northstar, by the Trustees of the Trust, on behalf of the Portfolio,
or by the affirmative vote of the holders of a majority of the outstanding
voting securities of the Portfolio (as defined in the 1940 Act).
Fees Paid to Northstar by the Portfolio.
For 1998, Northstar received total investment advisory fees from the
Portfolio of $94,002. Northstar Administrators received $12,534 for its services
under the Administrative Services Agreement during the same period. However, the
Adviser reimbursed the Portfolio $________ of operating expenses incurred during
the same period. Through December 31, 1998, the Adviser and Administrator have
collected $______ and $______, respectively, of advisory and administrative
fees. The Adviser has reimbursed the Portfolio $_________ of its operating
expenses during the same period.
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Northstar's directors and principal executive officers, and their
principal occupations including any position with the Portfolio, are shown
below. Unless otherwise indicated, the business address of each director and
officer is 300 First Stamford Place, Stamford, Connecticut 06902.
<TABLE>
<CAPTION>
Position with
Name Principal Occupation the Portfolio
- ------ ---------------------- --------------
<S> <C> <C>
John Turner Chairman and CEO of ReliaStar Financial Corp. Chairman
20 Washington Avenue South and affiliates; Director of Northstar and
Minneapolis, Minnesota 55401 Northstar Affiliates.
John Flittie President and COO of ReliaStar Financial Corp. None
20 Washington Avenue South and affiliates; Director of Northstar and
Minneapolis, Minnesota 55401 Northstar Affiliates.
Mark L. Lipson President; Chairman/CEO and Director of President
Northstar; Director and Officer of Northstar
Distributors, Inc., Northstar Administrators
Corp., Northstar Funding, Inc., and Northstar
Holding, Inc.
Robert J. Adler Executive Vice President of Northstar and None
President, Northstar Distributors, Inc.
Jeffrey Aurigemma Vice President, Investments, Northstar. Vice President
Stephanie L. Beckner Vice President, Secretary and Counsel of Vice President
Northstar; Vice President & Secretary of and Secretary
Northstar Affiliates.
Jeffrey Bernstein Vice President, Investments, Northstar. Vice President
Thomas Ole Dial Executive Vice President, Chief Investment Vice President
Officer -- Fixed Income of Northstar.
Mary Lisanti Executive Vice President, Chief Investment Vice President
Officer -- Equities of Northstar.
Agnes Mullady Senior Vice President and CFO of Northstar; Vice President
President, Northstar Administrators and Treasurer
Corporation and Vice President & Treasurer
of Northstar Affiliates.
</TABLE>
MISCELLANEOUS
Other Business
The Trustees know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is their
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named as proxies in the enclosed form of proxy.
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<PAGE>
Other Information
Northstar Investment Management Corporation serves as the Portfolio's
investment adviser. Northstar Administrators Corporation is its administrator,
and Northstar Distributors, Inc. is its principal underwriter, all are located
at 300 First Stamford Place, Stamford, Connecticut 06902.
Shareholder Proposals
As a general matter, the Portfolio does not hold regular annual or other
meetings of shareholders. Any shareholder who wishes to submit proposals for
consideration at a special meeting of the Portfolio's shareholders should send
such proposal to the Portfolio, c/o Northstar Investment Management Corporation
at 300 First Stamford Place, Stamford, Connecticut 06902. Proposals must be
received within a reasonable time prior to the date of the meeting. Timely
submission of a proposal does not necessarily mean that such proposal will be
included.
By Order of the Trustees,
/s/ Mark L. Lipson
----------------------------------
Mark L. Lipson
President
Stamford, Connecticut
March 1, 1999
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED REPLY ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE>
EXHIBIT A
NORTHSTAR GALAXY TRUST RESEARCH ENHANCED INDEX PORTFOLIO
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of April, 1999 by and between Northstar
Investment Management Corporation, a Delaware Corporation (hereinafter the
"Adviser"), investment adviser for the Northstar Galaxy Trust Research Enhanced
Index Portfolio, a series of the Northstar Galaxy Trust (the "Trust"),
(hereinafter the "Fund") and J.P. Morgan Investment Management Inc., a Delaware
corporation (hereinafter the "Subadviser").
WHEREAS, the Adviser has been retained by the Trust, an open-end
diversified management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), to provide investment advisory
services to the Portfolio pursuant to an Investment Advisory Agreement dated May
2, 1994 (the "Investment Advisory Agreement"); and
WHEREAS, the Trustees of the Trust, including a majority of the Trustees
who are not "interested persons," as defined in the 1940 Act, and the
Portfolio's shareholders have approved the appointment of the Subadviser to
perform certain investment advisory services for the Portfolio pursuant to this
Subadvisory Agreement with the Adviser and the Subadviser is willing to perform
such services for the Portfolio;
WHEREAS, the Subadviser is 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 Portfolio 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 the
assets of the Portfolio with power on behalf of and in the name of the Portfolio
at Subadviser's discretion; subject at all times to the supervision of the
Adviser and the Trustees of the Trust:
(a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of
investments, subject to the duty to render to the Trustees of the Trust,
the Adviser and the Custodian written reports of the composition of the
portfolio of the Portfolio as often as the Trustees of the Trust 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
Portfolio, provided that the Subadviser shall have
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no other authority to direct the transfer of the Portfolio's funds or
assets to itself or other persons and shall have no other authority over
the disbursement (as opposed to investment decisions) of funds or assets
nor any custody of any of the Portfolio'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 Trust, or the Adviser may
give to the Subadviser with regard to any of the foregoing powers shall,
unless the contrary is expressly stated therein, override the general
authority given by this provision to the extent that the Trustees of the
Trust 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 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
request the Subadviser to place trades through brokers and other agents of
the Adviser's choice, subject to the Subadviser's judgment that such
brokers or agents will execute such trades on the best overall terms
available, taking into consideration factors the Subadviser deems relevant
including, without limitation, the price of the security, research or
other services which render that broker's services the most appropriate
for the Subadviser's needs, the financial condition and dealing and
execution capability of the broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing
basis; 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 Portfolio 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) of this provision.
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 (the "Code") and
all other applicable federal and state laws and regulations, the current
Prospectus and Statement of Additional Information for the Portfolio
supplied to the Subadviser by the Adviser, and with any applicable
procedures adopted by the Trustees in writing supplied to the Subadviser
by the Adviser; (ii) manage the Portfolio in accordance with the
investment requirements for regulated investment companies under
Subchapter M of the Code and regulations issued thereunder; (iii) direct
the placement of orders pursuant to its investment determinations for the
Portfolio directly with the issuer, or with any broker or dealer, in
accordance with applicable policies expressed in the Portfolio's
Prospectus and/or Statement of Additional Information and in accordance
with applicable legal requirements.
(b) furnish to the Portfolio whatever non-proprietary reports the
Portfolio may reasonably request with respect to the Portfolio's assets or
contemplated strategies. In addition, the Subadviser will keep the
Portfolio and the Trustees informed of developments materially affecting
the Portfolio's portfolio and shall, on the Subadviser's own initiative,
furnish to the Portfolio from time to time whatever information the
Subadviser believes appropriate for this purpose;
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(c) make available to the Portfolio's administrator, Northstar
Administrators Corp. (the "Administrator"), the Adviser, and the
Portfolio, promptly upon their request, such copies of its investment
records and ledgers with respect to the Portfolio as may be required to
assist the Adviser, the Administrator and the Portfolio in their
compliance with applicable laws and regulations. The Subadviser will
furnish the Trustees with such periodic and special reports regarding the
Portfolio as they may reasonably request;
(d) immediately notify the Adviser and the Portfolio 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 Portfolio and the Adviser immediately of any material fact
known to the Subadviser respecting or relating to the Subadviser that is
not contained in the Trust's Registration Statement, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of
any statement contained therein that becomes untrue in any material
respect. The Portfolio, Adviser, Administrator, and their Affiliates shall
likewise immediately notify the Subadviser if any of them becomes aware of
any regulatory action of the type described in this subparagraph 2(d).
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 directors, officers and employees,
and other internal operating costs; provided, however, that the Subadviser shall
be entitled to reimbursement on a monthly basis by the Adviser of all reasonable
out-of-pocket expenses properly incurred by it in connection with serving as
subadviser to the Portfolio. For the avoidance of doubt, the Portfolio 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 Portfolio in the preparation and
printing of the 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 Portfolio to the Transfer
Agent and the Custodian;
(c) the reasonable fees and expenses of accountants, auditors,
lawyers and other professional advisors to the Portfolio;
(d) any interest, fee or charge payable on or on account of any
borrowing by the Portfolio;
(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 Portfolio;
(f) the fees of any stock exchange or over-the-counter market on
which shares of the Portfolio 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;
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(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 Portfolio or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares of the
Portfolio 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 Portfolio 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 Portfolio insurance and blanket
fidelity bonds.
4. Compensation. As compensation for the services provided by the
Subadviser under this Agreement, the Adviser will pay the Subadviser at the end
of each calendar month an advisory fee computed daily at an annual rate equal to
0.20 of 1% of the Portfolio's average daily net assets. The "average daily net
assets" of the Portfolio shall mean the average of the values placed on the
Portfolio's net assets as of 4:00 p.m. (New York time) on each day on which the
net asset value of the Portfolio is determined consistent with the provisions of
Rule 22c-1 under the 1940 Act or, if the Portfolio lawfully determines the value
of its net assets as of some other time on each business day, as of such other
time. The value of net assets of the Portfolio shall always be determined
pursuant to the applicable provisions of the Trust's Declaration of Trust and
the Registration Statement. If, pursuant to such provisions, the determination
of net asset value is suspended for any particular business day, then for the
purposes of this Section 4, the value of the net assets of the Portfolio as last
determined shall be deemed to be the value of its net assets as of the close of
regular trading on the New York Stock Exchange, or as of such other time as the
value of the net assets of the Portfolio's portfolio may lawfully be determined,
on that day. If the determination of the net asset value of the shares of the
Portfolio has been so suspended for a period including any month end when the
Subadviser's compensation is payable pursuant to this Section, the Subadviser's
compensation payable at the end of such month shall be computed on the basis of
the value of the net assets of the Portfolio as last determined (whether during
or prior to such month). If the Portfolio determines the value of the net assets
of its portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on that
day for the purposes of this Section 4.
5. Books and Records. The Subadviser agrees to maintain such books and
records with respect to its services to the Portfolio 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 Portfolio and will be surrendered
promptly to the Portfolio 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 Portfolio are
being conducted in accordance with applicable laws and regulations.
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<PAGE>
6. Standard of Care and Limitation of Liability. The Subadviser shall
exercise its best judgment 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 Portfolio or the
holders of the Portfolio'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 Portfolio or to holders of the Portfolio's
shares or to the Adviser to which the Subadviser 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 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
Portfolio.
7. Services Not Exclusive. The Advisor understands that the Subadviser now
acts, will continue to act and may act in the future as investment advisor to
fiduciary and other managed accounts and as investment advisor to other
investment companies, and, except as may be separately agreed to from time to
time between the Advisor and the Subadviser, the Trust has no objection to the
Subadviser so acting, provided that whenever the Portfolio and one or more other
accounts or investment companies advised by the Subadviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with a methodology believed to be equitable to each entity. The
Subadviser agrees to allocate similar opportunities to sell securities. The
Advisor recognizes that, in some cases, this procedure may limit the size of the
position that may be acquired or sold for the Portfolio. In addition, the
Adviser understands that the persons employed by the Subadviser to assist in the
performance of the Shareholder's duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict the right of the Subadviser or any affiliate of the Subadviser to
engage in and devote time and attention to other business or to render services
of whatever kind or nature.
8. Duration and Termination. This Subadvisory Agreement shall become
effective as of the date of its execution and shall continue in effect for a
period of two years from the date of execution. Thereafter, this Subadvisory
Agreement shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trust's
Trustees or (ii) a vote of a "majority" (as defined in the 1940 Act) of the
Portfolio's outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Trust's Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Subadvisory Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Subadvisory Agreement may be terminated: (a) at any time without penalty by the
Portfolio or the Adviser upon the vote of a majority of the Trustees or by vote
of a majority of the Portfolio's outstanding voting securities, upon sixty (60)
days written notice to the Subadviser, or (b) by the Subadviser without cause at
any time without penalty, upon sixty (60) days written notice to the Trust or
the Adviser. This Subadvisory Agreement will terminate automatically five
business days after the Subadviser receives written notice of the termination of
the Investment Advisory Agreement. This Subadvisory Agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act).
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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 Portfolio, and (ii) a majority of the
Trustees of the Trust, 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 and its affiliates from and against all liabilities, losses,
expenses, reasonable attorneys' fees and costs (other than attorneys' fees and
costs in relation to the preparation of this Agreement; each party bearing
responsibility for its own such costs and fees) 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 in Section 6 of
this Subadvisory Agreement in the performance by the Subadviser of, or its
failure to perform, the services required hereunder), arising from the Adviser's
(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, any claims for non-payment of advisory
fees; claims asserted or threatened by any shareholder of the Portfolio,
governmental or regulatory agency, or any other person; claims arising from any
wrongful act by the Portfolio or any of the Portfolio's trustees, officers,
employees, or representatives, or by the Adviser, its officers, employees or
representatives, or from any actions by the Portfolio's distributors or any
representative of the Portfolio; 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 covering shares filed or made public by the Portfolio 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 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
determination 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 Portfolio from and against all liabilities, losses, expenses, reasonable
attorneys' fees and costs (other than attorneys' fees and costs in relation to
the preparation of this Agreement; each party bearing responsibility for its own
such costs and fees) 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 (its
affiliates and their respective agents and employees) willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of the
Subadviser's reckless disregard of its obligations and duties under this
Subadvisory
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Agreement, or arising from failure to act in 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 Portfolio and shares issued by the Portfolio, 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
determination 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 shall promptly notify the other
party thereof. After becoming notified of the same, the party from whom
indemnification is sought shall be entitled to participate in any such action or
proceeding and shall assume any payment for the full defense thereof with
counsel reasonably satisfactory to the party seeking indemnification. After
properly assuming the defense thereof, the party from whom indemnification is
sought shall not be liable hereunder to the other party for any legal or other
expenses subsequently incurred by such party in connection with the defense
thereof, other than damages, if any, by way of judgment, settlement, or
otherwise pursuant to this provision. The party from whom indemnification is
sought 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.
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 Portfolio in any way or otherwise be deemed to be an agent of the Portfolio.
Likewise, the Portfolio, the Adviser and their respective affiliates, agents and
employees shall not be deemed agents of the Subadviser and shall have not
authority to bind Subadviser.
12. Use of Name. (a) The Portfolio may, subject to sub-clause (b) below,
use the name, "J.P. Morgan Investment Management Inc." or "J.P. Morgan" for
promotional purposes only for so long as this Agreement (or any extension,
renewal or amendment thereof) continues in force, unless the Subadviser shall
specifically consent in writing to such continued use thereafter. Any permitted
use by the Portfolio during the term hereof of the name of the Subadviser or
J.P. Morgan 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 Portfolio. The name and right to the name
J.P. Morgan Investment Management Inc. or any derivation of the name J.P. Morgan
shall at all times be owned and be the sole and exclusive property of J.P.
Morgan and its affiliated entities. J.P. Morgan Investment Management Inc., by
entering into this Agreement, is allowing the Portfolio to use the name J.P.
Morgan Investment Management Inc. and/or J.P. Morgan solely by or on behalf of
the Portfolio. At the conclusion of this Agreement or in the event of any
termination of this Agreement or if the Subadviser's
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<PAGE>
services are terminated for any reason, each of the authorized parties and their
respective employees, representatives, affiliates, and associates agree that
they shall immediately cease using the name J.P. Morgan Investment Management
Inc. and/or J.P. Morgan of said name for any purpose whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute, and
shall cause the Portfolio not to publish or distribute to Portfolio
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 any of its affiliates, unless the Subadviser shall have consented
in writing to such references in the form and context in which they appear;
provided however, that where the Portfolio timely seeks to obtain approval of
disclosure contained in any documents required to be filed by the Portfolio, 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. Miscellaneous.
(a) This Subadvisory Agreement shall be governed by the laws of the State
of New York, 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. In the event of any litigation in which the Adviser and the
Subadviser are adverse parties and there are no other parties to such
litigation, such action shall be brought in the United States District Court for
the State of New York, located in New York, New York.
(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.
14. 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. 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.
15. Non-Solicitation. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund), and
each of their employees and affiliates agree not to knowingly solicit to invest,
or accept or retain as investors, in the Portfolio any persons or entities who
are clients of or investors in any portfolio or investment vehicle managed by
any entity owned or affiliated with J.P. Morgan Investment Management Inc.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of April 1, 1999.
Northstar Investment Management Corporation
By: _______________________________________
MARK L. LIPSON
Chairman and CEO
J.P. Morgan Investment Management Inc.
By: _______________________________________
DIANE J. MINARDI
Vice President
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<PAGE>
INSURANCE COMPANY NAME PRINTS HERE
NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
VOTING INSTRUCTIONS
SPECIAL MEETING OF SHAREHOLDERS -- APRIL 8, 1999
PROXY SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned, revoking previous instructions, hereby instructs the above-
referenced Insurance Company (the "Company"), to vote all shares of Northstar
Multi-Sector Bond Portfolio (the "Portfolio"), a series of the Northstar Galaxy
Trust, Massachusetts business trust, which are held in the account of the
undersigned in the Variable Account, at the Special Meeting of persons having a
voting Interest in the Portfolio, to be held on April 8, 1999, at 10:00 a.m.
Eastern Time, at the offices of the Portfolio, 300 First Stamford Place,
Stamford, Connecticut, and at any and all adjustments thereof. The Company is
hereby instructed to vote on the proposal described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
Date: _________________, 1999
This voting instruction shall be signed
exactly as your name(s) appear hereon. If
attorney, executor, guardian or in some
other capacity or as an officer of a
corporation, please state capacity or
title as such.
_________________________________________
Signature(s)
<PAGE>
PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE AND MAIL THIS VOTING INSTRUCTION
FORM IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
This Voting Instructions Form, when properly executed, will be voted in
accordance with the instructions marked below by the undersigned. In the absence
of contrary instructions, this Instruction Form will be voted FOR the proposal.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW.
1. Proposal to approve a modification in the investment objective and name of
the Portfolio.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Proposal to approve a new subadvisory agreement between Northstar
Investment Management Corporation, investment adviser for the Portfolio,
and J.P. Morgan Investment Management Inc. and, in their discretion, upon
such other business as may come before the meeting or any adjournments
thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If no instruction is indicated above regarding the proposals to be voted on,
ReliaStar is instructed to vote my interest in the Separate Account on such
proposals, proportionately in accordance with instructions received from other
participants. If no instructions are received from any participant, ReliaStar
will vote "FOR" the proposals to be voted on and, on any other matters that
come before the Meeting, ReliaStar shall vote in accordance with its best
judgment.
