NORTHSTAR ADVANTAGE SPECIAL FUND, 485APOS, 1996-09-19

NORTHSTAR ADVANTAGE SPECIAL FUND
485APOS, 1996-09-19

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<PAGE>

As filed with the Securities and Exchange Commission on September 19, 1996
Registration Nos. 33-847; 811-4434
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. 17

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 18

NORTHSTAR SPECIAL FUND
---------------------------------------------------------------
(Exact name of Registrant as specified in charter)

Two Pickwick Plaza, Greenwich, CT 06830
-----------------------------------------------------
(Address of Principal Executive Offices)

(203)863-6200
--------------------------------------
(Registrant's telephone number)

Mark L. Lipson
c/o Northstar Investment Management Corporation
Two Pickwick Plaza, Greenwich, CT 06830
-----------------------------------------------------
(Name and address for agent for service)

Copies of all correspondence to:
Jeff Steele, Esq.
c/o Northstar Investment Management Corporation
Two Pickwick Plaza
Greenwich, CT 06830

<PAGE>

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
- - -
on [date] pursuant to paragraph (b)
- - -
60 days after filing pursuant to paragraph (a)(1)
- - -
X on November 18 pursuant to paragraph (a)(1)
- - -
75 days after filing pursuant to paragraph (a)(2)
- - -
on [date] pursuant to paragraph (a)(2) of Rule 485
- - -
If appropriate, check the following box:
X this post-effective amendment designates a new effective
- - - date for a previously filed post-effective amendment.
- -------------------------------------------------------------
* Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Invesment
Company Act of 1940. The Registrant has filed the Notice required by
Rule 24f-2 for its most recent fiscal year on or about February 16,
1996.

<PAGE>

CROSS REFERENCE SHEET
PURSUANT TO RULE 404(a)
UNDER THE SECURITIES ACT OF 1933
PART A
COMBINED PROSPECTUS

<TABLE>
<CAPTION>
FORM N-1A PART A ITEM PROSPECTUS CAPTION

<S> <C>
1. Cover Page Cover Page

2. Synopsis Expense Information

3. Condensed Financial Information Cover Page; Investment Objectives
and Policies of the Funds;
Investment Considerations and
Risk Factors; General Information

4. General Description of Registrant Cover Page; Investment Objectives
and Policies of the Funds;
Investment Considerations
and Risk Factors; General Information

5. Management of the Fund Management of the Funds

6. Capital Stock and Other Securities How Net Asset Value is Determined;
How to Purchase Shares;
Alternative Sales Arrangements;
Investor Services and Account
Policies; Dividends, Distribution
and Taxes; General Information

7. Purchases of Securities Being Offered How Net Asset Value is Determined;
How to Purchase Shares;
Alternative Sales Arrangements;
Investor Services and Account
Policies; Distribution Plans

8. Redemption or Repurchase How Net Asset Value is Determined;
How to Sell Shares

9. Legal Proceedings Not Applicable

</TABLE>

<PAGE>

CROSS REFERENCE SHEET
PART B

<TABLE>
<CAPTION>
FORM N-1A PART B ITEM STATEMENT OF ADDITIONAL INFORMATION
CAPTION

<S> <C>
10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information & History Cover Page; Other Information

13. Investment Objectives and Policies Cover Page; Investment Restrictions;
Investment Techniques

14. Management of the Fund Trustees and Officers

15. Control Persons and Principal N/A
Holders of Securities

16. Investment Advisory and Other Services of Northstar; the Subadvisers
Services and the Administrator

17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices Allocation

18. Capital Stock and Other Purchases and Redemptions
Securities

19. Purchases, Redemptions and Net Asset Value; Purchases and
Redemptions

20. Tax Status Dividends, Distribution and Taxes

21. Underwriter Underwriter and Distribution Services

22. Calculation of Performance Data Performance Information

23. Financial Statements Financial Statements

</TABLE>

PART C

The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C in the Registration Statement.

<PAGE>

[LOGO]

Two Pickwick Plaza (203) 863-6200
Greenwich, Connecticut, 06830 (800) 595-7827

COMBINED PROSPECTUS NOVEMBER 18, 1996

The Northstar Funds (the "Funds") are a group of open-end
diversified management investment companies. Each has its own investment
objective and specific investment goals. Shares of the Funds are offered by this
joint Prospectus. Northstar Investment Management Corporation ("Northstar" or
the "Adviser") is the investment adviser for each Fund, Northstar Distributors,
Inc. (the "Underwriter") is the underwriter of the Funds' shares, and Northstar
Administrators Corporation ( the "Administrator") serves as administrator to
each Fund. The Underwriter and the Administrator are each affiliates of
Northstar. Navellier Fund Management, Inc. serves as subadviser for Northstar
Special Fund and Northstar Growth + Value Fund. Wilson/Bennett serves as
subadviser for Northstar Income and Growth Fund. See "Management of the Funds."

This Prospectus sets forth concisely the information about the Funds
that prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
November 15, 1996, has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The Statement of Additional Information
is available without charge upon request to Northstar at the address or
telephone number given above.

* NORTHSTAR SPECIAL FUND ("Special Fund") seeks to achieve capital
appreciation through investment in a diversified portfolio of equity securities
selected for their potential for growth, primarily in small- and
mid-capitalization companies.

* NORTHSTAR GROWTH + VALUE FUND ("Growth + Value Fund") seeks capital
appreciation primarily by investing in publicly traded equity securities of
domestic issuers. The Fund will allocate its assets among companies
characterized as either "growth" or "value" companies according to criteria
established by the Fund's investment advisers.

* NORTHSTAR GROWTH FUND ("Growth Fund") seeks to achieve long-term
growth of capital by investing principally in common stocks selected for their
prospects for capital appreciation.

* NORTHSTAR INCOME AND GROWTH FUND ("Income and Growth Fund") seeks
current income balanced with the objective of achieving capital appreciation
through investments in common and preferred stocks, convertible securities,
investment grade corporate debt securities and government securities, selected
for their prospects of producing income and/or capital appreciation.

<PAGE>

* NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND ("Balance Sheet Fund")
seeks to realize income and, secondarily, capital appreciation through
investments in a balance of debt securities, common and preferred stocks, and
securities convertible into common stock.

* NORTHSTAR GOVERNMENT SECURITIES FUND ("Government Securities
Fund") seeks to achieve a high level of current income and to conserve principal
by investing in debt obligations issued or guaranteed by the U.S. Government or
its agencies and instrumentalities.

* NORTHSTAR STRATEGIC INCOME FUND ("Strategic Income Fund") seeks to
achieve high current income by allocating its investments among the following
sectors of the fixed income securities markets: debt obligations of the U.S.
Government, its agencies and instrumentalities; high yield-high risk,
lower-rated and nonrated U.S. and foreign fixed income securities; investment
grade corporate debt securities; and investment grade debt obligations of
foreign governments, their agencies and instrumentalities and obligations of
supranational entities. Northstar believes that by allocating the Fund's
assets in this manner, the Fund will experience a more stable net asset value,
since diversification over several market sectors tends to reduce volatility.

* NORTHSTAR HIGH YIELD FUND ("High Yield Fund") seeks to achieve
high current income primarily through investments in long and intermediate-term
high yield-high risk, lower-rated and nonrated corporate debt instruments.

* NORTHSTAR HIGH TOTAL RETURN FUND ("High Total Return Fund") seeks to
achieve high income by investing predominantly in high yield-high risk,
lower-rated and non-rated U.S. dollar-denominated debt securities. It is the
Fund's policy, while investing in income producing securities, also to maximize
total return from a combination of income and capital appreciation.

THE HIGH YIELD FUND, HIGH TOTAL RETURN FUND, AND STRATEGIC INCOME FUND MAY
INVEST IN LOWER RATED DEBT SECURITIES, COMMONLY KNOWN AS "JUNK BONDS."
INVESTORS SHOULD CONSIDER THAT THESE SECURITIES CARRRY GREATER RISKS, SUCH AS
THE RISK OF DEFAULT, THAN OTHER DEBT SECURITIES. SEE " RISK FACTORS -- HIGH
YIELD SECURITIES."

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.

<PAGE>

EXPENSE INFORMATION

The tables and examples below are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Funds. SHAREHOLDER TRANSACTION EXPENSES are paid by investors
when purchasing or redeeming Fund shares. ANNUAL OPERATING EXPENSES are paid
by the Fund and are reflected in the Fund's net asset value.

NORTHSTAR SPECIAL FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T

<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as a % of Offering Price)........................................ 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds)............................................... None(1) 5.00%(2) 1.00% 4.00%(2)

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee................................................................. .75% .75% .75% .75%
12b-1 Fee...................................................................... .30% 1.00%(3) 1.00%(3) .95%(3)
Other Expenses (after Class B and C expense reimbursement)(6).................. .37% .32% .36% .46%
Total Fund Operating Expenses.................................................. 1.42% 2.07% 2.11% 2.16%

</TABLE>

NORTHSTAR GROWTH + VALUE FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee................................................................. 1.00% 1.00% 1.00%
12b-1 Fee....................................................................... .30% 1.00%(3) 1.00%(3)
Other Expenses.................................................................. .55% .55% .55%
Total Fund Operating Expenses.................................................. 1.85% 2.55% 2.55%

</TABLE>

<PAGE>

NORTHSTAR GROWTH FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T

<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as a % of Offering Price)......................................... 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds)............................................... None(1) 5.00%(2) 1.00% 4.00%(2)

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee................................................................. .75% .75% .75% .75%
12b-1 Fee....................................................................... .30% 1.00%(3) 1.00%(3) .95%(3)
Other Expenses.................................................................. .37% .32% .36% .30%
Total Fund Operating Expenses.................................................. 1.42% 2.07% 2.11% 2.00%

</TABLE>

NORTHSTAR INCOME AND GROWTH FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C

<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as a % of Offering Price)......................................... 4.75% None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds)............................................... None(1) 5.00%(2) 1.00%
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee................................................................. .75% .75% .75%
12b-1 Fee....................................................................... .30% 1.00%(3) 1.00%(3)
Other Expenses.................................................................. .46% .48% .47%
Total Fund Operating Expenses.................................................. 1.51% 2.23% 2.22%

</TABLE>

<PAGE>

NORTHSTAR BALANCE SHEET
OPPORTUNITIES FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T

<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as a % of Offering Price)......................................... 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds)............................................... None(1) 5.00%(2) 1.00% 4.00%(2)

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee................................................................. .65% .65% .65% .65%
12b-1 Fee....................................................................... .30% 1.00%(3) 1.00%(3) .95%(3,4)
Other Expenses.................................................................. .32% .30% .26% .28%
Total Fund Operating Expenses................................................... 1.27% 1.95% 1.91% 1.68%

</TABLE>

NORTHSTAR GOVERNMENT
SECURITIES FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T

<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as a % of Offering Price)................................... ..... 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds)............................................... None(1) 5.00%(2) 1.00% 4.00%(2)

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee (after waiver)(5)............................................... .45% .45% .45% .45%
12b-1 Fee...................................................................... .30% 1.00%(3) 1.00%(3) .65%(3,4)
Other Expenses................................................................. .27% .25% .23% .20%
Total Fund Operating Expenses (after waiver)(5)................................ 1.02% 1.70% 1.68% 1.30%

</TABLE>

<PAGE>

NORTHSTAR STRATEGIC
INCOME FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T

<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as a % of Offering Price) ........ 4.75% None None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds) ............... None(1) 5.00%(2) 1.00% 4.00%(2)

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee ................................ .65% .65% .65% .65%
12b-1 Fee ..................................... .30% 1.00%(3) 1.00%(3) .95%(3,4)
Other Expenses (after expense reimbursement)(6) .41% .41% .37% .30%
Total Fund Operating Expenses ................. 1.36% 2.06% 2.02% 1.90%

</TABLE>

NORTHSTAR HIGH YIELD FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS T

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee ................................ .45% .45% .45% .45%
12b-1 Fee ...................................... .30% 1.00%(3) 1.00%(3) .65% (3,4)
Other Expenses ................................. .27% .26% .27% .23%
Total Fund Operating Expenses .................. 1.02% 1.71% 1.72% 1.33%

</TABLE>

<PAGE>

NORTHSTAR HIGH TOTAL RETURN FUND

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C

<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Front-End Sales Load Imposed on Purchase
of Shares (as a % of Offering Price) ........ 4.75% None None
Maximum Contingent Deferred Sales Load on Sale
of Shares (as a % of the lesser of original
price or redemption proceeds) ............... None(1) 5.00%(2) 1.00%

ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee ................................ .75% .75 .75%
12b-1 Fee ...................................... .30% 1.00%(3) 1.00%(3)
Other Expenses ................................. .50% .50% .52%
Total Fund Operating Expenses ................. 1.55% 2.25% 2.27%
</TABLE>

(1) Purchases of $1 million or more are not subject to an initial sales
charge; however, a CDSC of up to 1% will be imposed on such purchases in
the event of certain redemption transactions within 18 months following
the date of purchase.

(2) The Class B CDSC on redemptions decreases 1% annually after year one
to 2% in years four and five and to 0% after year five. The Class T CDSC
on redemptions decreases 1% annually after year one to 0% after year four.

(3) Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charge permitted by the National Association
of Securities Dealers, Inc. ("NASD") rules regarding investment companies.

(4) Although the Trustees have set 12b-1 fees at the levels indicated,
under the shareholder-approved 12b-1 plans for Class T shares and
applicable rules of the NASD, the Trustees of each Fund, except for
Strategic Income Fund, may increase these fees to an aggregate of up to
0.95% annually without further shareholder approval. The Trustees of
Strategic Income Fund, may increase these 12b-1 fees for Class T Shares to
an aggregate of up to 1.00% annually without further shareholder approval.

(5) After waiver of 0.20% effective January 1, 1989. Without such a fee
waiver, the Management Fees would be 0.65% of average daily net assets,
and Total Fund Operating Expenses would be 1.22%, 1.90%, 1.88% and 1.50%,
respectively, for Class A, B, C and T shares.

(6) Absent the expense reimbursement by the Adviser, Other Expenses and
Total Fund Operating Expenses for Class B and Class C shares of the
Special Fund would have been .46% and .48% and 2.21% and 2.23%,
respectively, and Other Expenses and Total Fund Operating Expenses for
Class A, B, C and T shares of Strategic Income Fund would have been .48%,
.47%, .43% and .28% and 1.43%, 2.12%, 2.08% and 2.18%, respectively.

<PAGE>

EXAMPLES: An investor in each of the Funds would pay the following expenses on a
$1,000 investment assuming a 5% annual return throughout the period, and, unless
otherwise noted, redemption at the end of each period.

<TABLE>
<CAPTION>
NORTHSTAR SPECIAL FUND

CLASS A CLASS B(1) CLASS B CLASS C CLASS C CLASS T CLASS T(2)

<S> <C> <C> <C> <C> <C> <C> <C>
1 Year ........................... $ 61 $ 72 $ 21 $ 32 $ 21 $ 62 $ 22
3 Years .......................... 90 98 65 66 66 88 68
5 Years .......................... 121 134 111 113 113 116 116
10 Years ......................... 210 240 240 244 244 233 233

</TABLE>

<TABLE>
<CAPTION>
NORTHSTAR GROWTH + VALUE FUND

CLASS A CLASS B CLASS B (2) CLASS C CLASS C (2)

<S> <C> <C> <C> <C> <C>
1 year ................................... $ 65 $ 76 $ 26 $ 36 $ 26
3 years .................................. 103 109 79 79 79
5 years .................................. 143 136 136 136 136
10 years ................................. 254 289 289 289 289
</TABLE>

NORTHSTAR GROWTH FUND

CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)

<S> <C> <C> <C> <C> <C> <C> <C>
1 Year ........................... $ 61 $ 72 $ 21 $ 32 $ 21 $ 60 $ 20
3 Years .......................... 90 98 65 66 66 83 63
5 Years .......................... 121 134 111 113 113 108 108
10 Years ......................... 210 240 240 244 244 218 218
</TABLE>

NORTHSTAR INCOME AND GROWTH FUND

CLASS A CLASS B (1) CLASS B (2) CLASS C CLASS C (2)

<S> <C> <C> <C> <C> <C>
1 year .............................. $ 62 $ 74 $ 23 $ 33 $ 23
3 years ............................. 93 102 70 69 69
5 years ............................. 126 142 119 119 119
1 years ............................. 219 256 256 255 255
</TABLE>

<PAGE>

NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND

CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)

<S> <C> <C> <C> <C> <C> <C> <C>
1 Year ........................... $ 60 $ 71 $ 20 $ 30 $ 19 $ 57 $ 17
3 Years .......................... 86 94 61 60 60 73 53
5 Years .......................... 114 128 105 103 103 91 91
10 Years ......................... 194 227 227 223 223 188 188
</TABLE>

NORTHSTAR GOVERNMENT SECURITIES FUND

CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)

<S> <C> <C> <C> <C> <C> <C> <C>
1 Year ........................... $ 57 $ 69 $ 17 $ 27 $ 17 $ 53 $ 13
3 Years .......................... 78 87 54 53 53 61 41
5 Years .......................... 101 116 92 91 91 71 71
10 Years ......................... 166 201 201 199 199 149 149
</TABLE>

<TABLE>
<CAPTION>
NORTHSTAR STRATEGIC INCOME FUND

CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)

<S> <C> <C> <C> <C> <C> <C> <C>
1 Year ........................... $ 61 $ 72 $ 21 $ 31 $ 21 $ 59 $ 19
3 Years .......................... 89 97 65 63 63 80 60
5 Years .......................... 118 134 111 109 109 N/A N/A
10 Years ......................... 203 239 239 235 235 N/A N/A
</TABLE>

<TABLE>
<CAPTION>
NORTHSTAR HIGH YIELD FUND

CLASS A CLASS B(1) CLASS B(2) CLASS C CLASS C(2) CLASS T(1) CLASS T(2)

<S> <C> <C> <C> <C> <C> <C> <C>
1 Year ........................... $ 57 $ 69 $ 17 $ 28 $ 17 $ 54 $ 14
3 Years .......................... 78 87 54 54 54 62 42
5 Years .......................... 101 116 93 93 93 73 73
10 Years ......................... 166 202 202 203 203 152 152
</TABLE>

<PAGE>

NORTHSTAR HIGH TOTAL RETURN FUND

CLASS A CLASS B (1) CLASS B (2) CLASS C CLASS C (2)

<S> <C> <C> <C> <C> <C>
1 year............................................................. $ 63 $ 74 $ 23 $ 33 $ 23
3 years ........................................................... 94 103 70 71 71
5 years ........................................................... 128 143 120 122 122
10 years .......................................................... 223 258 258 261 261
</TABLE>

(1) Class B and Class T shares convert to Class A shares eight years after
purchase in the case of B Shares and on the later of eight years after
purchase or May 31, 1998 in the case of T Shares; therefore, Class A
expenses are used after year eight.

(2) Assumes no redemption.

The examples above assume the reinvestment of all dividends and
distributions and that the percentage amounts listed under "Annual
Operating Expenses" remain the same each year. The examples should not be
considered to be indicative of actual or expected performance or expenses,
both of which will vary.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights set forth below present certain information
and ratios as well as performance information for a share of each Class
outstanding throughout each year or portion thereof. Except where indicated,
percentages for periods of less than one year have been annualized. The
financial highlights for fiscal years ended in 1995 (and for all prior periods
in the case of the Income and Growth and the High Total Return Funds) have been
audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon is incorporated by reference in the Statement of Additional Information
and should be read in conjunction with the related audited and financial
statements and notes thereto which are contained in the Annual Report for each
Fund. Further information about performance of each Fund is also contained in
the Annual Report, a copy of which may be obtained without charge from
Northstar. The financial highlights for the Special, Growth, Balance Sheet
Opportunities, Government Securities, Strategic Income, and High Yield Funds for
the periods prior to 1995 were audited by other independent accountants. The
financial highlights for the Income and Growth and High Total Return Funds for
the six months ended April 30, 1996 are unaudited and should be read in
conjunction with the Semiannual Report for each Fund. The financial highlights
for the Special, Growth, Balance Sheet Opportunities, Government Securities,
Strategic Income and High Yield Funds for the six months ended June 30, 1996 are
unaudited and should be read in conjunction with the Semiannual Report for each
Fund.

NORTHSTAR SPECIAL FUND

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
(UNAUDITED) (UNAUDITED) (UNAUDITED)
1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ................ $ 20.92 $ 19.56 $ 20.84 $ 19.56 $ 20.84 $ 19.56
Income from investment operations:
Net investment income (loss) ...................... 0.00 (0.09) (0.02) (0.12) (0.02) (0.15)
Net realized and unrealized gain (loss) ........... 3.83 2.48 3.77 2.43 3.77 2.46
Total from investment operations .................. 3.83 2.39 3.75 2.31 3.75 2.31
Less distributions:
Dividends from net realized gain .................. 0.00 (1.03) 0.00 (1.03) 0.00 (1.03)
Total distributions ............................... 0.00 (1.03) 0.00 (1.03) 0.00 (1.03)
Net Asset Value end of period........................ $ 24.75 $ 20.92 $ 24.59 $ 20.84 $ 24.59 $ 20.84
Total Return (excluding sales charges)(2) ........... 18.36% 12.20% 18.04% 11.79% 18.00% 11.79%
Ratios/supplemental data:
Net assets end of period (thousands)............... $ 47,634 $2,335 $ 78,331 $ 1,491 $23,657 $ 62
Ratio of expenses to average net assets(4)......... 1.49% 1.50% 2.17% 2.20% 2.19% 2.20%
Ratio of expenses to average net assets
before waiver or reimbursement(4)(3) ............ 1.54 1.50 2.22 2.21 2.24 2.23
Ratio of net investment income to
average net assets(4) ............................ (0.05)% (0.91)% (0.70)% (1.64)% (0.68)% (1.60)%
Average Commissions Per Share ....................... $ 0.04 -- $ 0.04 -- $ 0.04 --
Portfolio Turnover Rate ............................. 66% 71% 66% 71% 66% 71%

</TABLE>

<PAGE>

NORTHSTAR SPECIAL FUND (continued)

<TABLE>
<CAPTION>
CLASS T SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30,
(Unaudited)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of
period............ $ 20.84 $19.64 $20.79 $17.40 $15.74 $10.64 $11.67 $9.55 $7.90 $8.92 $10.00
Income from
investment operations:
Net investment
income (loss) ... (0.09) (0.34) (0.25) (0.32) (0.33) (0.21) (0.20) (0.06) (0.13) (0.14) (0.06)
Net realized and
unrealized
gain (loss) ... 3.84 2.57 (0.76) 3.83 2.61 6.24 (0.83) 2.18 1.78 (0.88) (1.02)
Total from
investment
operations ... 3.75 2.23 (1.01) 3.51 2.28 6.03 (1.03) 2.12 1.65 (1.02) (1.08)
Less distributions:
Dividends from net
realized
gain ......... -- (1.03) (0.14) (0.12) (0.62) (0.93) -- -- -- -- --
Total
distributions ... -- (1.03) (0.14) (0.12) (0.62) (0.93) -- -- -- -- --
Net Asset Value
end of
period .......... $24.59 $20.84 $19.64 $20.79 $17.40 $15.74 $10.64 $11.67 $9.55 $7.90 $8.92
Total Return
(excluding
sales
charges)(2) ..... 18.04% 11.34% (4.86)% 20.16% 14.54% 57.27% (8.83)% 22.20% 20.89% (11.43)% 10.80%
Ratios/supplemental
data:
Net assets
end of period
(thousands) .... $37,036 $33,557 $38,848 $28,838 $11,336 $5,480 $3,024 $3,958 $3,330 $3,078 $3,823
Ratio of expenses to
average net
assets(4) ...... 2.14% 2.16% 2.16% 2.34% 2.84% 2.95% 2.95% 2.95% 2.96% 2.94% 2.90%
Ratio of expenses
to average net
assets before waiver
or reimbursement
(4)(3) ........... 2.19% 2.16% 2.16% 2.34% 2.84% 3.69% 4.98% 4.89% 6.01% 4.52% 4.82%
Ratio of net
investment income
to average net
assets(4) ...... (0.83)% (1.50)% (1.25)% (1.66)% (2.12)% (1.57)% (0.97)% (0.44)% (1.06)% (1.22)% (0.76)%
Average Commissions
Per Share ....... $0.04 -- -- -- -- -- -- -- -- -- --
Portfolio Turnover
Rate ............ 66% 71% 39% 35% 40% 85% 72% 85% 40% 57% 28%
</TABLE>

NORTHSTAR GROWTH FUND

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
(Unaudited) (Unaudited) (Unaudited)
1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ....... $ 15.53 $ 17.59 $ 15.50 $ 17.59 $ 15.50 $ 17.59
Income from investment operations:
Net investment income (loss) .............. 0.01 0.08 (0.03) 0.06 (0.03) 0.04
Net realized and unrealized gain (loss) . . 1.53 1.95 1.51 1.92 1.51 1.92
Total from investment operations .......... 1.54 2.03 1.48 1.98 1.48 1.96
Less distributions:
Dividends from net investment income ...... -- (0.10) -- (0.08) -- (0.06)
Dividends from net realized gain .......... -- (3.99) -- (3.99) -- (3.99)
Dividends from capital .................... -- -- -- -- -- --
Total distributions ....................... -- (4.09) -- (4.07) -- (4.05)
Net Asset Value end of period ............. $ 17.07 $ 15.53 $ 16.98 $ 15.50 $ 16.98 $ 15.50
Total Return (excluding sales charges)(2) . 9.92% 11.55% 9.55% 11.27% 9.55% 11.17%
Ratios/supplemental data:
Net assets end of period (thousands) ...... $ 1,377 $ 1,355 $ 3,393 $ 1,987 $ 256 $ 69
Ratio of expenses to average net assets(4) 1.47% 1.42% 2.12% 2.07% 2.18% 2.11%
Ratio of net investment income to
average net assets(4) ..................... (0.41)% 0.63% (0.27)% 0.06% (0.36)% 0.02%
Average Commissions Per Share ............. $ 0.06 -- $ 0.06 -- $0.06 --
Portfolio Turnover Rate ................... 44% 134% 44% 134% 44% 134%

</TABLE>

NORTHSTAR GROWTH FUND (continued)

<PAGE>

<TABLE>
<CAPTION>
CLASS T SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30,
(Unaudited)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of
period.............. $15.53 $ 15.75 $ 17.33 $ 16.36 $ 16.37 $12.49 $ 13.85 $ 11.96 $ 10.47 $ 10.54 $ 10.00
Income from investment
operations:
Net investment
income (loss) (0.01) 0.07 0.08 0.02 0.02 0.09 0.10 0.20 0.16 0.09 0.03
Net realized and
unrealized gain
(loss).......... 1.50 3.77 (1.41) 1.67 1.30 4.62 (0.83) 2.66 1.58 (0.07) 0.87
Total from
investment
operations..... 1.49 3.84 (1.33) 1.69 1.32 4.71 (0.73) 2.86 1.74 0.02 0.90
Less distributions:
Dividends from net
investment
income -- (0.07) (0.08) (0.04) (0.02) (0.08) (0.10) (0.20) (0.17) (0.08) (0.03)
Dividends from net
realized gain.. -- (3.99) (0.15) (0.67) (1.31) (0.75) (0.51) (0.76) (0.08) -- (0.33)
Dividends from
capital ....... -- -- (0.02) (0.01)(9) -- -- (0.02) (0.01) -- (0.01) --
Total distributions -- (4.06) (0.25) (0.72) (1.33) (0.83) (0.63) (0.97) (0.25) (0.09) (0.36)
Net Asset Value
end of period $ 17.02 $ 15.53 $ 15.75 $ 17.33 $ 16.36 $16.37 $ 12.49 $ 13.85 $ 11.96 $ 10.47 $ 10.54
Total Return
(excluding
sales charges)(2) 9.60% 24.40% (7.66)% 10.36% 8.05% 38.10% (5.24)% 24.25% 16.70% 0.11% 8.91%
Ratios/supplemental data:
Net assets end of
period (thousands) $71,545 $ 76,343 $76,391 $80,759 $ 56,759 $40,884 $24,927 $ 29,842 $25,359 $27,493 $17,013
Ratio of expenses to
average net assets(4) 1.99% 2.00% 2.00% 2.04% 2.15% 2.25% 2.33% 2.33% 2.46% 2.29% 2.77%
Ratio of net
investment income
to average net
assets(4) (0.11)% 0.37% 0.49% 0.13% 0.09% 0.66% 0.80% 1.39% 1.40% 0.83% 0.37%
Average Commissions
Per Share ........ $ 0.06 -- -- -- -- -- -- -- -- -- --
Portfolio Turnover
Rate.............. 44 % 134% 53.76% 42.27% 46.77% 63.56% 54.22% 74.56% 58.73% 54.72% 32.66%

</TABLE>

NORTHSTAR INCOME AND GROWTH FUND

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
(Unaudited) (Unaudited) (Unaudited)
1996 1995 1994(5) 1996 1995 1994(6) 1996 1995 1994(7)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ......... $10.86 $10.00 $10.00 $10.84 $9.99 $10.64 $10.83 $9.99 $10.37
Income from investment operations:
Net investment income (loss) ............... 0.15 0.35 0.30 0.12 0.27 0.20 0.12 0.27 0.20
Net realized and unrealized gain (loss) .... 0.63 0.84 (0.05) 0.61 0.85 (0.65) 0.61 0.85 (0.38)
Total from investment operations ............ 0.78 1.19 0.25 0.73 1.12 (0.45) 0.73 1.12 (0.18)
Less distributions:
Dividends from net investment income ....... (0.15) (0.33) (0.25) (0.11) (0.27) (0.20) (0.11) (0.28) (0.20)
Net Asset Value end of period ............... $11.49 $10.86 $10.00 $11.46 $10.84 $9.99 $11.45 $10.83 $9.99
Total Return (excluding sales charges) ....... 6.69% 13.19% 2.48% 6.25% 12.31% (4.20)% 6.29% 12.33% (1.75)%
Ratios/Supplemental data:
Net assets end of period (thousands)........ $81,002 $76,031 $72,223 $67,869 $60,347 $37,767 $59,413 $53,661 $4,823
Ratio of expenses to average net assets(4) .. 1.54% 1.51% 1.50% 2.26% 2.23% 2.20% 2.21% 2.22% 2.20%
Ratio of expense reimbursement
to average net assets(4) ................. -- -- 0.06% -- -- 0.16% -- -- 0.47%
Ratio of net investment income
to average net assets(4) ................. 2.82% 3.39% 3.73% 2.11% 2.66% 3.00% 2.15% 2.67% 2.87%
Average Commissions Per Share ................ $0.06 -- -- -- -- -- -- -- --
Portfolio Turnover Rate ...................... 88% 91% 26% 88% 91% 26% 88% 91% 26%

</TABLE>

<PAGE>

NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND

CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
(Unaudited) (Unaudited) (Unaudited)
1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ........ $12.53 $12.77 $12.51 $12.77 $12.52 $12.77
Income from investment operations:
Net investment income (loss) .............. 0.27 0.43 0.25 0.35 0.24 0.38
Net realized and unrealized gain (loss) ... 0.36 1.06 0.34 1.09 0.34 1.07
Total from investment operations .......... 0.63 1.49 0.59 1.44 0.58 1.45
Less distributions:
Dividends from net investment income ...... (0.27) (0.48) (0.24) (0.45) (0.23) (0.45)
Dividends from net realized gain .......... -- (1.25) -- (1.25) -- (1.25)
Dividends from capital .................... -- -- -- -- -- --
Total distributions ....................... (0.27) (1.73) (0.24) (1.70) (0.23) (1.70)
Net Asset Value end of period .... $12.89 $12.53 $12.86 $12.51 $12.87 $12.52
Total Return (excluding sales charges) ...... 5.03% 11.95% 4.72% 11.56% 4.63% 11.49%
Ratios/supplemental data:
Net assets end of period (thousands) ...... $1,112 $797 $3,281 $1,759 $344 $231
Ratio of expenses to average net assets(4) . 1.38% 1.27% 2.03% 1.95% 2.16% 1.91%
Ratio of net investment income to
average net assets(4) .................... 4.27% 4.99% 3.63% 4.38% 3.57% 4.49%
Average Commissions Per Share ............... $0.08 -- $0.08 -- $0.08 --
Portfolio Turnover Rate ..................... 56% 131% 56% 131% 56% 131%
</TABLE>

NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND (continued)

CLASS T SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30,
(Unaudited)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Net Asset Value
beginning of period......$ 12.54 $11.54 $12.94 $12.05 $11.66 $10.13 $10.71 $9.71 $9.11 $10.39 $10.00
Income from investment
operations:
Net investment
income (loss) ......... 0.26 0.57 0.57 0.49 0.55 0.57 0.61 0.68 0.62 0.56 0.40
Net realized and
unrealized gain (loss) 0.35 2.27 (1.25) 1.20 0.36 1.53 (0.54) 1.00 0.58 (1.04) 0.67
Total from
investment operations 0.61 2.84 (0.68) 1.69 0.91 2.10 0.07 1.68 1.20 (0.48) 1.07
Less distributions:
Dividends from net
investment income .... (0.25) (0.59) (0.54) (0.49) (0.52) (0.57) (0.63) (0.68) (0.60) (0.57) (0.40)
Dividends from net
realized gain ........ -- (1.25) (0.16) (0.31) -- -- -- -- -- (0.22) (0.28)
Dividends from
capital .............. -- -- (0.02)(9) -- -- -- (0.02) -- -- (0.01) --
Total distributions ..... (0.25) (1.84) (0.72) (0.80) (0.52) (0.57) (0.65) (0.68) (0.60) (0.80) (0.68)
Net Asset Value
end of period .......... $12.90 $12.54 $11.54 $12.94 $12.05 $11.66 $10.13 $10.71 $9.71 $9.11 $10.39
Total Return (excluding
sales charges)(2) ....... 4.70% 25.11% (5.33)% 14.08% 8.06% 21.17% 0.78% 17.70% 13.39% (5.35)% 10.74%
Ratios/supplemental data:
Net assets end of
period (thousands)...... 67,698 $72,472 $73,764 $80,841 $56,823 $49,367 $44,750 $58,006 $57,425 $58,722 $49,332
Ratio of expenses to
average net assets(4) .... 1.69% 1.68% 1.69% 1.77% 2.02% 2.06% 2.10% 2.04% 2.10% 1.98% 2.15%
Ratio of net
investment income

<PAGE>

to average net assets(4) (0.11)% 4.44% 4.36% 3.99% 4.73% 5.21% 5.73% 6.38% 6.30% 5.70% 5.72%
Average Commissions
Per Share .............. $0.08 -- -- -- -- -- -- -- -- -- --
Portfolio Turnover Rate .... 44 % 131% 59.26% 38.26% 58.96% 76.87% 57.39% 56.15% 24.57% 45.91% 78.71%
</TABLE>

NORTHSTAR GOVERNMENT SECURITIES FUND

1996 1995(1) 1996 1995(1) 1996 1995(1)
---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ............$10.07 $9.51 $10.07 $ 9.51 $ 10.07 $9.51
Income from investment operations:
Net investment income (loss) .................. 0.26 0.34 0.04 0.30 0.24 0.30
Net realized and unrealized gain (loss) ....... (0.82) 0.59 (0.62) 0.59 (0.82) 0.59
Total from investment operations .............. (0.56) 0.93 (0.58) 0.89 (0.58) 0.89
Less distributions:
Dividends from net investment income .......... (0.26) (0.37) (0.23) (0.33) (0.23) (0.33)
Dividends from net realized gain .............. -- -- -- -- -- --
Dividends from capital ........................ -- -- -- -- -- --
Total distributions ........................... (0.26) (0.37) (0.23) (0.33) (0.23) (0.33)
Net Asset Value end of period ................... $9.25 $10.07 $9.26 $10.07 $9.26 $10.07
Total Return (excluding sales charges)(2) ...... (5.56)% 10.04% (5.76)% 9.61% (5.76)% 9.61%
Ratios/supplemental data:
Net assets end of period (thousands) .......... $12,834 $3,235 $5,695 $2,790 $1,096 $8
Ratio of expenses to average net assets(4) ... 1.04% 1.02% 1.73% 1.70% 1.88% 1.68%
Ratio of expenses to average net assets
before waiver or reimbursement(4)(3) ........ 1.24 1.22 1.93 1.90 2.50 1.88
Ratio of net investment income to
average net assets(4) ........................ 6.86% 6.01% 5.93% 5.20% 6.36% 5.28%
Average Commissions Per Share ................... -- -- -- -- -- --
Portfolio Turnover Rate ....................... 35% 295% 35% 295% 35% 295%
</TABLE>

NORTHSTAR GOVERNMENT SECURITIES FUND (continued)

<TABLE>
<CAPTION>
CLASS T SHARES
SIX MONTHS
ENDED YEAR
JUNE 30, ENDED
(Unaudited) DECEMBER 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of period ....... $10.07 $8.74 $10.32 $9.22 $8.99 $8.47 $8.47 $8.26 $8.80 $9.94 $10.00
Income from investment
operations:

<PAGE>
Net investment
income (loss) ............ 0.24 0.58 0.56 0.59 0.61 0.67 0.68 0.72 0.75 0.64 0.54
Net realized and
unrealized gain (loss) .. (0.81) 1.35 (1.56) 1.09 0.23 0.52 -- 0.21 (0.48) (1.10) 0.27
Total from
investment operations .. (0.57) 1.93 (1.00) 1.68 0.84 1.19 0.68 0.93 0.27 (0.46) 0.81
Less distributions:
Dividends from net
investment income ...... (0.25) (0.60) (0.57) (0.58) (0.61) (0.67) (0.68) (0.72) (0.75) (0.64) (0.54)
Dividends from net
realized gain .......... -- -- -- -- -- -- -- -- -- -- (0.33)
Dividends from capital ....... -- -- (0.01) -- -- -- -- -- (0.06) (0.04) --
Total distributions .......... (0.25) (0.60) (0.58) (0.58) (0.61) (0.67) (0.68) (0.72) (0.81) (0.68) (0.87)
Net Asset Value
end of period ............ $9.25 $10.07 $8.74 $10.32 $9.22 $8.99 $8.47 $8.47 $8.26 $8.80 $9.94
Total Return (excluding
sales charges)(2) ......... (5.66)% 22.90% (9.82)% 18.48% 9.77% 14.73% 8.57% 11.73% 2.97% (4.72)% 8.50%
Ratios/supplemental data:
Net assets end of
period (thousands) ....... $122,117 $150,951 $152,608 $184,156 $144,144 $121,389 $108,420 $123,735 $169,421 $237,190 $223,598
Ratio of expenses to
average net assets(4) ...... 1.30% 1.30% 1.29% 1.31% 1.39% 1.44% 1.43% 1.45% 1.88% 1.79% 1.89%
Ratio of expenses to
average net assets before
waiver or reimbursement
(4)(3) 1.50% 1.50% 1.49% 1.51% 1.59% 1.64% 1.63% 1.65% 1.88% 1.79% 1.89%
Ratio of net
investment income
to average net assets(4) . 6.14% 6.23% 6.00% 5.83% 6.81% 7.68% 8.23% 8.57% 8.47% 7.02% 6.38%
Average Commissions
Per Share ................ -- -- -- -- -- -- -- -- -- -- --
Portfolio Turnover Rate ...... 35% 295% 314.91% 81.41% 120.08% 87.00% 16.77% 73.94% 494.05% 412.29% 241.73%

</TABLE>

NORTHSTAR STRATEGIC INCOME FUND

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30. OCTOBER 31,
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- -----------
1996 1995(1) 1996 1995(1) 1996 1995(1)
---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ........... $ 12.40 $ 12.24 $ 12.39 $ 12.24 $12.38 $12.24
Income from investment operations:
Net investment income (loss) ................... 0.50 0.63 0.45 0.55 0.45 0.55
Net realized and unrealized gain (loss) .......... (0.17) 0.13 (0.15) 0.15 (0.16) 0.14
Total from investment operations ................. 0.33 0.76 0.30 0.70 0.29 0.69
Less distributions:

<PAGE>
Dividends from net investment income ........... (0.51) (0.60) (0.47) (0.55) (0.47) (0.55)
Dividends from net realized gains .............. -- -- -- -- -- --
Dividends from capital ......................... -- -- -- -- -- --
Total Distributions .............................. (0.51) (0.60) (0.47) (0.55) (0.47) (0.55)
Net Asset Value end of period .................. $12.22 $12.40 $12.22 $12.39 $12.20 $12.38
Total Return (excluding sales charges)(2) ....... 2.66% 6.40% 2.42% 5.89% 2.34% 5.81%
Ratios/supplemental data:
Net assets end of period (thousands) ........... $22,591 $21,790 $27,622 $22,143 $3,129 $2,172
Ratio of expenses to average net assets(4) ....... 1.40% 1.36% 2.13% 2.06% 2.11% 2.02%
Ratio of expenses to average net assets
before waiver or reimbursement(4)(3) .......... 1.45 1.43 2.17 2.12 2.15 2.08
Ratio of net investment income
to average net assets(4) ..................... 8.11% 7.03% 7.43% 6.47% 7.46% 6.48%
Average Commissions Per Share .................... -- -- -- -- -- --
Portfolio Turnover Rate .......................... 46% 153% 46% 153% 46% 153%

</TABLE>

NORTHSTAR STRATEGIC INCOME FUND (continued)

CLASS T SHARES

SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30,
(Unaudited)
1996 1995 1994 (8)
<S> <C> <C> <C>
Net Asset Value beginning of period .................. $12.39 $11.71 $12.00
Income from investment operations:
Net investment income (loss)......................... 0.50 0.98 0.51
Net realized and unrealized gain (loss) ............... (0.19) 0.66 (0.25)
Total from investment operations ...................... 0.31 1.64 0.26
Less distributions:
Dividends from net investment income ................ (0.48) (0.96) (0.49)
Dividends from net realized gains ................... -- -- (0.05)
Dividends from capital .............................. -- -- (0.01)(9)
Total Distributions ................................... (0.48) (0.96) (0.55)
Net Asset Value end of period ......................... $12.22 $12.39 $11.71
Total Return (excluding sales charges)(2) ............. 2.50% 14.54% 2.14%
Ratios/Supplemental data:
Net assets end of period (thousands) ................ $27,930 $30,228 $25,252
Ratio of expenses to average net assets(4) ............ 1.96% 1.90% 1.90%
Ratio of expenses to average net assets
before waiver or reimbursement(4)(3) ............... 2.11 2.18 2.53
Ratio of net investment income
to average net assets(4) .......................... 7.61% 6.86% 7.92%
Average Commissions Per Share ......................... -- -- --
Portfolio Turnover Rate .............................. 46% 153% 156%

</TABLE>

NORTHSTAR HIGH YIELD FUND

<PAGE>

1996 1995(1) 1996 1995(1) 1996 1995(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ............ $8.56 $8.68 $8.57 $8.68 $8.57 $8.68
Income from investment operations:
Net investment income (loss) .................. 0.32 0.48 0.30 0.44 0.31 0.44
Net realized and unrealized gain (loss) ....... 0.02 (0.10) 0.01 (0.09) (0.01) (0.09)
Total from investment operations .............. 0.34 0.38 0.31 0.35 0.30 0.35
Less distributions:
Dividends from net investment income .......... (0.35) (0.50) (0.32) (0.46) (0.32) (0.46)
Dividends from net realized gain .............. -- -- -- -- -- --
Total distributions ............................. (0.35) (0.50) (0.32) (0.46) (0.32) (0.46)
Net Asset Value end of period ................... $8.55 $8.56 $8.56 $8.57 $8.55 $8.57
Total Return (excluding sales charges)(2) ....... 3.97% 4.48% 3.62% 4.17% 3.50% 4.17%
Ratios/supplemental data:
Net assets end of period (thousands)........... $10,765 $7,466 $58,049 $29,063 $10,455 $3,410
Ratio of expenses to average net assets(4) .... 1.06% 1.02% 1.73% 1.71% 1.73% 1.72%
Ratio of expenses to average net assets
before waiver or reimbursement(4)(3) ........ 1.06% 1.02% 1.73% 1.71% 1.73% 1.72%
Ratio of net investment income to
average net assets(4) ........................ 9.07% 9.83% 8.41% 9.18% 8.44% 9.29%
Average Commissions Per Share ................... $0.05 -- $0.05 -- $0.05 --
Portfolio Turnover Rate ......................... 70% 103% 70% 103% 70% 103%
</TABLE>

NORTHSTAR HIGH YIELD FUND (continued)

<TABLE>
<CAPTION>
CLASS T SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30,
(Unaudited)
1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period......... $8.56 $8.29 $9.31 $9.09 $7.94 $6.27 $8.55 $10.00
Income from investment operations:
Net investment income (loss) .............. 0.32 0.84 0.81 0.85 0.92 1.08 1.12 0.60
Net realized and unrealized gain (loss) ... 0.01 0.26 (0.99) 0.80 1.19 1.67 (2.30) (1.45)
Total from investment operations .......... 0.33 1.10 (0.18) 1.65 2.11 2.75 (1.18) (0.85)
Less distributions:
Dividends from net investment income ...... (0.34) (0.83) (0.83) (0.83) (0.94) (1.08) (1.10) (0.60)
Dividends from net realized gain .......... -- -- (0.01) (0.60) (0.02) -- -- --
Total distributions ....................... (0.34) (0.83) (0.84) (1.43) (0.96) (1.08) (1.10) (0.60)
Net Asset Value end of period ............... $8.55 $8.56 $8.29 $9.31 $9.09 $7.94 $6.27 $8.55
Total Return (excluding sales charges)(2) .. 3.86% 13.71% (2.18)% 18.89% 27.57% 46.49% (14.59)% (8.81)%
Ratios/supplemental data:
Net assets end of period (thousands).......$127,732 $139,711 $136,426 $125,095 $64,063 $25,651 $11,342 $11,045
Ratio of expenses to average net assets(4) . 1.31% 1.33% 1.34% 1.40% 1.50% 1.50% 1.44% 1.35%
Ratio of expenses to average net assets
before waiver or reimbursement(4)(3) .... -- -- -- -- 1.55% 1.96% 2.25% 2.65%
Ratio of net investment income to
average net assets(4) .................... 8.77% 9.69% 9.08% 8.84% 10.30% 14.84% 15.15% 11.44%
Average Commissions Per Share ............... $0.05 -- -- -- -- -- -- --
Portfolio Turnover Rate ..................... 70% 103% 86.20% 176.40% 121.51% 57.48% 156.23% 39.63%

</TABLE>

<PAGE>

NORTHSTAR HIGH TOTAL RETURN FUND

CLASS A SHARES CLASS B SHARES
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED OCTOBER 31, ENDED YEAR ENDED OCTOBER 31,
APRIL 30, APRIL 30,
(Unaudited) (Unaudited)

1996 1995 1994 (5) 1996 1995 1994 (6)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period ..... $4.48 $4.41 $5.00 $4.47 $4.41 $5.20
Income from investment operations:
Net investment income (loss) ........... 0.12 0.48 0.41 0.11 0.45 0.33
Net realized and unrealized gain (loss) .. 0.28 0.07 (0.60) 0.28 0.06 (0.80)
Total from investment operations ......... 0.40 0.55 (0.19) 0.39 0.51 (0.47)
Less distributions:
Dividends from net investment income ... (0.12) (0.48) (0.40) (0.11) (0.45) (0.32)
Net Asset Value end of period ............ $4.76 $4.48 $4.41 $4.75 $4.47 $4.41
Total Return (excluding sales charges) ... 11.87% 13.02 % (4.11)% 11.50% 11.97% (9.30)%
Ratios/supplemental data:
Net assets end of period (thousands) ... $128,119 $88,552 $50,797 $201,841 $96,362 $25,880
Ratio of expenses to average net assets(4) 1.50% 1.55% 1.50% 2.19 2.25 2.20
Ratio of expense reimbursement
to average net assets(4) ............... -- 0% 0.11% -- 0% 0.20%
Ratio of net investment income
to average net assets(4) ............. 10.58% 10.90% 10.09% 9.86% 10.20% 9.72%
Average Commissions Per Share ............ -- -- -- -- -- --
Portfolio Turnover Rate .................. 92% 145% 163% 92% 145% 163 %
</TABLE>

NORTHSTAR HIGH TOTAL RETURN FUND (continued)

<TABLE>
<CAPTION>
CLASS C SHARES
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30,
(Unaudited)
1996 1995 1994 (7)
<S> <C> <C> <C>
Net Asset Value beginning of period ....................... $4.49 $4.41 $5.06
Income from investment operations:
Net investment income (loss) ............................. 0.11 0.44 0.26
Net realized and unrealized gain (loss) .................... 0.28 0.09 (0.65)
Total from investment operations ........................... 0.39 0.53 (0.39)
Less distributions:
Dividends from net investment income ..................... (0.11) (0.45) (0.26)
Net Asset Value end of period .............................. $4.77 $4.49 $4.41
Total Return (excluding sales charges)(2) .................. 11.47% 12.44% (7.21)%
Ratios/supplemental data:
Net assets end of period (thousands) ..................... $30,449 $11,011 $2,330
Ratio of expenses to average net assets(4) ................. 2.18% 2.27% 2.20%
Ratio of expense reimbursement
to average net assets(4) ................................. -- 0.00 0.99%
Ratio of net investment income
to average net assets(4) ............................... 9.88% 10.18% 9.46%
Average Commissions Per Share .............................. -- -- --
Portfolio Turnover Rate .................................... 92% 145% 163%
</TABLE>

(1) From June 5, 1995 (commencement of operations) through December 31, 1995.
(2) Total returns for 1986 for the Special, Growth, Balance Sheet and
Government Securities Funds (1989 for the High Yield Fund and 1994 for
Strategic Income Fund) represent actual, not annualized, percentages.
Unaudited prior to 1992.
(3) Reflects ratio that would have existed, in the case of the Government
Securities Fund, had the former Adviser not elected to waive 0.20% of its
investment advisory fee effective January 1, 1989, and, in the case of
the Special, Strategic Income and High Yield, Funds, had the former
Adviser or its affiliates not reimbursed such Funds for a portion of
their expenses.
(4) Annualized.
(5) From November 8, 1993 (commencement of operations) through October 31,
1994.
(6) From February 9, 1994 (commencement of operations) through October 31,
1994.

<PAGE>

(7) From March 31, 1994 (commencement of operations) through October 31,
1994.
(8) From July 7, 1994 (commencement of operations) through October 31, 1994.
(9) Represents distribution in excess of net investment income due to
differences in book and tax income.

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

NORTHSTAR SPECIAL FUND seeks capital appreciation by investing primarily
in a diversified portfolio of domestic equity securities selected on the basis
of their potential for growth. The Fund focuses on the securities of smaller,
lesser-known companies , including emerging growth companies. Emerging growth
companies are those that, while still in the developmental stage, have
demonstrated, or are expected to achieve, growth of earnings over major business
cycles. Smaller, less established companies may offer greater opportunities for
capital appreciation than larger, better established companies, but may also
involve additional risks. See "Investment Considerations and Risk Factors
- -- Equity Securities."

Equity securities in which the Fund may invest include common stocks, preferred
stocks, convertible securities, warrants and other stock purchase rights,
private placements and other restricted equity securities, equity interests in
trusts, limited partnerships and joint ventures and interests in real estate
investment trusts. The Fund may invest up to 20% of its net assets in the
securities of foreign issuers, not more than 10% of which may be in issuers
whose securities are not listed on a U.S. securities exchange. See "Investment
Considerations and Risk Factors -- Foreign Securities."

NORTHSTAR GROWTH + VALUE FUND seeks capital appreciation by investing in a
diversified portfolio of equity securities. The equity securities in which the
Fund may invest include common stocks, preferred stocks, convertible securities,
warrants and other stock purchase rights, private placements and other
restricted equity securities, equity interests in trusts, limited partnerships
and joint ventures and interests in real estate investment trusts. The Fund may
invest up to 20% of its assets in the securities of foreign issuers in the form
of American Depository Receipts.

In managing the Fund, the investment advisers will employ quantitative analysis
to identify "growth" companies and "value" companies. The percentage of Fund
assets allocated to "growth" and "value" companies will vary depending on the
advisers assessment of economic conditions and investment opportunities. In
general, the companies with greater price and return momentum, above average
earnings or sales growth, and higher price to earnings ratios are considered
growth companies by the advisers. On the other hand, companies with lower book
value to price ratios, higher earnings or dividend yields and higher returns on
equity are considered value companies.

In periods of unusual market conditions, for temporary and defensive purposes,
when the Adviser considers it appropriate, the Fund may maintain part or all of
its assets in cash, or may invest part or all of its assets in U.S. government
securities, commercial paper, bankers' acceptances, repurchase agreements and
certificates of deposit.

NORTHSTAR GROWTH FUND seeks long-term growth of capital by investing
primarily in domestic common stocks. Under normal market conditions, at least
65% of the Fund's total assets will be invested in securities
purchased on the basis of the potential for capital appreciation. The Fund
also may invest in preferred stocks and convertible securities

<PAGE>

issued by such companies. The Fund focuses on the securities of companies with
records of above-average earnings growth or companies which, in the Adviser's
view, are substantially undervalued in relation to assets. The Fund may invest
up to 20% of its net assets in securities of foreign issuers, not more than 10%
of which may be invested in issuers that are not listed on a U.S. securities
exchange. See " Investment Considerations and Risk Factors -- Foreign
Securities."

NORTHSTAR INCOME AND GROWTH FUND seeks current income balanced with
capital appreciation primarily by investing in dividend paying equity
securities, convertible securities, and investment grade debt securities .
Under normal market conditions, the Fund will invest at least 65% of its total
assets in income-producing securities. Under normal conditions, the Fund does
not intend to invest more than 30% of its assets in convertible securities.
The Fund may invest up to 20% of its net assets in the securities of foreign
issuers, not more than 10% of which shall be in issuers whose securities are not
listed on a U.S. securities exchange. See "Investment Considerations and Risk
Factors -- Foreign Investments."

NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND seeks income, with a secondary
objective of capital appreciation, primarily by investing in domestic debt
and equity securities. Under normal market conditions, at least 65% of the
Fund's total assets will be invested in income-producing securities. Up to 25%
of the Fund's assets may be invested in debt securities rated as low as B by
Moody's or S&P. These securities are considered speculative and generally
involve greater risk, including the risk of loss of income and principal, than
higher-rated securities. See "Investment Considerations and Risk Factors--
High Yield Securities" and in the Appendix. The Fund may invest up to 20% of its
net assets in securities of foreign issuers, not more than 10% of which may be
invested in issuers that are not listed on a U.S. securities exchange. See
"Investment Considerations and Risk Factors -- Foreign Securities."

Equity securities in which the Fund may invest include common stocks,
preferred stocks, convertible securities and warrants and other stock purchase
rights. The Fund's debt securities may be of any maturity and pay fixed,
floating or adjustable interest rates. The Fund also may invest in pay-in-kind
securities and discount obligations, including zero coupon securities.

NORTHSTAR GOVERNMENT SECURITIES FUND seeks high current income and
conservation of principal by investing primarily in debt obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities ("U.S.
Government Securities"). Northstar intends to invest at least 65% of the
Fund's assets in securities supported by the full faith and credit of the United
States, and at least 80% of the Fund's assets in securities issued by any single
instrumentality or agency supported by the full faith and credit of the United
States.

The Fund's assets will be managed so that the Fund is a permissible investment
for federal credit unions under the Federal Credit Union Act and rules and
regulations established by the National Credit Union Administration. The Fund
will notify shareholders 60 days before making any change to this policy. The
shares of the Government Securities Fund are not

<PAGE>

insured or guaranteed by the U.S. Government or its agencies or
instrumentalities, or by any other person or entity.

NORTHSTAR STRATEGIC INCOME FUND seeks high current income by allocating
substantially all of its assets among (i) U.S. Government Securities, (ii) high
yield securities, including preferred stocks, convertible securities, zero
coupon and pay-in-kind securities, lower-rated foreign government securities,
(iii) investment grade corporate debt securities, and (iv) investment grade
securities (or unrated securities that Northstar determines to be of equivalent
quality) issued by foreign governments or their agencies or instrumentalities,
or supranational entities. The amount of assets allocated to each sector is
based on the Adviser's assessment of the maximum level of current income that
can be achieved without incurring undue risks to principal value. In making this
allocation, Northstar will rely on its analysis of economic conditions,
interest rate risk, currency risk and its analysis of opportunities in each
sector based on current and historical market data. Northstar believes that by
allocating the Fund's assets among each of the sectors the Fund may experience
lower price volatility than would be experienced by investing exclusively in any
one of the markets. No more than 60% of the Fund's assets may be invested in
foreign issuers across all sectors.

The Fund may invest without limitation in securities rated as low as Ca by
Moody's or CC by S&P (or in nonrated securities deemed to be of equivalent
standing by the Adviser) and up to 10% of the Fund's assets allocated to this
sector may be in the lowest rating categories (C by Moody's and D by S&P). The
lowest rating categories include bonds which are in default. High yield
securities are subject to special risks, typically are subject to greater
market fluctuations and may be less liquid and subject to greater risk of loss
of income and principal due to default by the issuer . See "Investment
Considerations and Risk Factors -- High Yield Securities" and the Appendix.

NORTHSTAR HIGH YIELD FUND seeks high current income by investing primarily
in long-term and intermediate-term fixed income securities, with emphasis on
high yield corporate debt instruments of domestic and foreign issuers. Under
normal market conditions, at least 65% of the Fund's total assets will be
invested in high yield bonds. The Fund may invest without limitation in
securities rated as low as Ca by Moody's or CC by S&P (or in securities which
are not rated but are considered to be of equivalent quality by the Adviser),
and may invest up to 1% of its assets in the lowest rating categories (C for
Moody's and D for S&P). The lowest rating categories include bonds which are in
default. High yield securities are subject to special risks, typically are
subject to greater market fluctuations and may be less liquid and subject to
greater risk of loss of income and principal due to default by the issuer. See
"Investment Considerations and Risk Factors -- Foreign Securities" and the
Appendix. Northstar will attempt to maximize income and reduce risk through
diversification of the portfolio and by credit analysis of each issuer, as well
as by monitoring broad economic trends and corporate developments.

The Fund may invest up to 35% of its assets in securities of foreign issuers,
10% of which may be of issuers which are not traded on a U.S. securities
exchange. See "Investment Considerations and Risk Factors -- Foreign
Securities." The Fund may invest up to 25% of its

<PAGE>

assets in equity or equity-related securities, such as preferred stocks ,
convertible securities or rights or warrants associated with debt instruments.

NORTHSTAR HIGH TOTAL RETURN FUND seeks high income. As an investment policy,
the Fund, while investing in income producing securities, will seek to maximize
total return through a combination of income and capital appreciation. The Fund,
will pursue this policy by taking advantage of equity participations, market
developments, yield disparities and variations in the creditworthiness of
issuers. Under normal market conditions, the Fund will seek to achieve its
investment objective by investing at least 65% of its total assets in
higher-yielding, lower-rated U.S. dollar-denominated debt securities of U.S. and
foreign issuers, which involve special risks and are predominantly speculative
in character. The Fund may invest up to 35% of its assets in non-U.S. Dollar
denominated securities. Investments in securities offering the high current
income sought by the Fund, while generally providing greater income and
potential opportunity for gain than investments in higher rated securities, also
entail greater risk. The Fund is subject to a limit of 50% of its assets in
securities of foreign issuers, including a limit of 35% of such assets in
emerging market debt. Emerging Markets are countries whose sovereign bonds
generally are rated below investment grade and whose financial markets are not
well-developed. The Fund intends to restrict its investments in emerging markets
to those with sound economies that are expected to experience strong growth with
controlled inflation, and therefore higher-than-average returns, over time. See
"Investment Considerations and Risk Factors -- Foreign Securities."

Most of the debt securities in which the Fund invests are lower rated, and may
include bonds in the lowest rating categories (C for Moody's and D for S&P) and
unrated bonds. Most of the securities will be rated at least Caa by Moody's or
at least CCC by S&P, or if not rated, are of equivalent quality in the opinion
of Northstar. The Fund may invest up to 10%, and hold up to 25%, of its assets
in securities rated below Caa by Moody's or CCC by S&P. Such debt securities are
highly speculative and may be in default of payment of interest and/or repayment
of principal may be in arrears. The issuers of such debt securities may be
involved in bankruptcy or reorganization proceedings and/or may be restructuring
outstanding debt. See "Investment Considerations and Risk Factors --
Foreign Securities" and the Appendix.

The Fund may invest in debt securities of any maturity that pay fixed, floating
or adjustable interest rates. The Fund also may invest in discount obligations,
including zero-coupon securities, which do not pay interest but, rather, are
issued at a significant discount to their maturity values, or securities that
pay interest, at the issuer's option, in additional securities instead of cash
(pay-in-kind securities). To a lesser extent the Fund may invest in equity or
equity-related securities, including common stock, preferred stock, convertible
securities and rights and warrants attached to debt instruments.

INVESTMENT CONSIDERATIONS AND RISK FACTORS

Each Fund's net asset value per share is expected to fluctuate. Investors should
consider each of the Funds as a supplement to an overall investment program and
should invest only if they are willing to undertake the risks involved.

<PAGE>

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 each 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's 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.

FIXED-INCOME SECURITIES. Even though interest bearing securities are investments
which promise a stable stream of income, the price of such securities generally
are inversely affected by changes in interest rates and, therefore, are subject
to the risk of market price fluctuations. The values of fixed-income securities
also may be affected by changes in the credit rating or financial condition of
the issuer. Certain securities purchased by the Funds, such as those rated Baa
or lower by Moody's and BBB or lower by S&P, may be subject to such risk with
respect to the issuing entity and to greater market price fluctuations than
certain lower-yielding, higher rated fixed-income securities. See "High Yield
Securities" below.

HIGH YIELD SECURITIES. Balance Sheet Opportunities Fund, Strategic Income
Fund, High Yield Fund, and High Total Return Fund may invest in higher
yielding (and therefore higher risk) debt securities to the extent described
above. These are securities such as those rated Ba by Moody's or S&P (commonly
known as "junk bonds"). They generally are not meant for short term investing
and may be subject to certain risks with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated fixed
income securities. The retail market for these securities may be less liquid
than that of higher rated securities; adverse conditions could make it difficult
at times for the Fund to sell certain securities or could result in lower prices
than those used in calculating the Fund's net asset value. The value of these
securities, as is the case with the value of higher rated fixed income
securities, will be inversely affected by changes in interest rates.

The ratings of Moody's and S&P represent their opinion as to the quality of the
obligations which they undertake to rate. Ratings are relative and subjective
and, although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of such
obligations. Although these ratings may be an initial criterion for selection of
portfolio investments, Northstar also will evaluate these securities and the
ability of the issuers of such securities to pay interest and repay principal.
The Fund's ability to achieve its investment objective may be more dependent on
the Adviser's credit analysis than might be the case for a fund that invested in
higher rated securities. See the Appendix for a description of bond ratings
categories.

<PAGE>

The weighted average composition of the Funds' portfolios at the end of their
1995 fiscal year was:

<TABLE>
<CAPTION>
Balance Sheet
Opportunities Strategic High Yield High Total
Fund Income Fund Fund Return Fund

<S> <C> <C> <C> <C>
Investment Grade 17.7% 0% 0% 0%
BB 16.2 26.8 37.1 21.8
B 5 29.5 60.2 51.3
CCC 0 0 1.4 7.7
CC 0 0 0 0
C 0 0 0 0
D 0 0 0 0
Non-rated 4.4 4.3 1.3 15.2
U.S. Governments,
equities and others 56.7 39.4 0 4
Total 100% 100% 100% 100%

</TABLE>

High yield securities are subject to special risks, typically are subject to
greater market fluctuations and may be less liquid and subject to greater risk
of loss of income and principal due to default by the issuer. See, "Investment
Considerations and Risk Factors -- High Yield Securities" and the Appendix.

The Strategic Income Fund may also invest in high yielding preferred stocks and
convertible securities. The Fund also may invest in debt securities issued at a
discount

to face value, including zero coupon securities, and securities that pay
interest, at the issuer's option, in additional securities (pay-in-kind
securities).

SOVEREIGN DEBT OBLIGATIONS. The Strategic Income Fund may invest in
participations in (i) entities organized and operated for the purpose of
restructuring the investment characteristics of instruments issued or guaranteed
by foreign governments of emerging market countries ("Sovereign Debt
Obligations"), and (ii) loans between foreign governments and financial
institutions. Sovereign Debt Obligations held by the Fund generally will not be
traded on securities exchanges. The Fund may invest in Sovereign Debt
Obligations customarily referred to as "Brady Bonds," which are created through
the exchange of existing commercial bank loans to foreign entities for new
obligations in connection with debt restructuring. Brady Bonds may be
collateralized or uncollateralized and issued in various currencies (although
most are dollar denominated), and they are actively traded in the
over-the-counter secondary market. Dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or

<PAGE>

floating rate discount bonds, are generally collateralized in full as to
principal due at maturity by U.S. Treasury zero coupon obligations which have
the same maturity as the Brady Bonds.

FOREIGN SECURITIES. Each Fund, except the U.S. Government Securities Fund, may
invest in securities of foreign issuers, to the extent described above. Foreign
securities markets generally are not as developed or efficient as those in the
United States. Securities of some foreign issuers are less liquid and more
volatile than securities of comparable U.S. issuers. Similarly, volume and
liquidity in most foreign securities markets are less than in the U.S. and at
times, volatility of price can be greater than in the U.S.

Because evidences of ownership of such securities usually are held outside the
United States, the Fund will be subject to additional risks which include
possible: adverse political and economic developments, seizure or
nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect the payment of and interest on the foreign
securities or restrict the payment of principal and interest to investors
located outside the country of the issuer, whether from currency blockage or
otherwise.

Developing countries have economic structures that are generally less diverse
and mature, and political systems that are less stable, than those of developed
countries. The markets of developing countries may be more volatile than the
markets of more mature economies; however, such markets may provide higher rates
of return to investors. Many developing countries providing investment
opportunities for the Funds 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 adverse
affects on the economies and securities markets of certain of these countries.

Since foreign securities are often purchased with and payable in currencies of
foreign countries, the value of these assets as measured in U.S. dollars may be
affected favorably or unfavorably by changes in currency rates and exchange
control regulations.

U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
that differ in their interest rates, maturities and times of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others, by the right of the issuer to borrow from the Treasury; others
by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not obligated to do so by law.

The Government Securities Fund may invest in zero coupon U.S. Treasury
securities, which are U.S. Treasury obligations that have been stripped of their
unmatured interest coupons, the coupons themselves and receipts of certificates
representing interests in such stripped debt obligations and coupons. A zero
coupon security pays no interest to its holder and is sold at a

<PAGE>

discount to its face value at maturity. The amount of the discount fluctuates
with the market price of the security. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically and are likely to respond to a greater degree to
changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities.

INVESTMENT TECHNIQUES. - Unless otherwise stated, each of the following
strategies and techniques may be utilized by the Fund. The Fund may, but
does not currently intend to, engage in certain additional investment techniques
not described in this Prospectus. These techniques and additional information on
the securities and techniques described in the Prospectus are contained in the
Statement of Additional Information.

OPTIONS AND FUTURES TRANSACTIONS. Each Fund may enter into futures contracts on
securities, financial indices and foreign currencies and options on such
contracts and may invest in options on securities, financial indices and foreign
currencies, and forward contracts (collectively "derivative instruments"). The
Funds intend to use derivative instruments primarily to hedge the value of their
portfolios against potential adverse movements in securities price, foreign
currency markets or interest rates. To a limited extent, the Funds may also use
derivative instruments for non-hedging purposes such as increasing a Fund's
income or otherwise enhancing return. When a Fund invests in a derivative
instrument, it may be required to segregate cash and other high-grade liquid
assets or portfolio securities to "cover" the Fund's position. Assets segregated
or set aside may limit a Fund's portfolio management activities while such Fund
maintains the positions, which could diminish the Fund's return due to foregoing
other potential investments with such assets.

The use of options and futures strategies involves certain other risks,
including the risk that no liquid market will exist and that the Fund will be
unable to effect closing transactions at any particular time or at an acceptable
price, the risk of imperfect correlation between movements in options and
futures prices and movements in the price of securities which are the subject of
the hedge, and the risk that uncovered futures transactions could lead to
potentially unlimited losses. The successful use of options and futures
strategies depends on the ability of Northstar to forecast correctly rate
movements and general stock market price movements. Expenses and losses incurred
as a result of these hedging strategies will reduce the current return of the
Fund. See the Statement of Additional Information for further information on
derivative instruments.

REPURCHASE AGREEMENTS. A Fund may invest in repurchase agreements, either for
temporary defensive purposes or to generate income from its cash balances. Under
a repurchase agreement, the Fund buys a security from a bank or dealer, which is
obligated to buy it back at a fixed price and time. The security is held in a
separate account at the Fund's custodian and constitutes the Fund's collateral
for the bank's or dealer's repurchase obligation. Additional collateral may be
added so that the obligation will at all times be fully collateralized. However,
if the bank or dealer defaults or enters into bankruptcy, the Fund may
experience costs and delays in liquidating the collateral, and may experience a
loss if it is unable to demonstrate its right to the collateral in a bankruptcy
proceeding. Repurchase agreements maturing more than seven days in the future
are considered illiquid, and a Fund will invest no more than 5% of its net
assets

<PAGE>

in such repurchase agreements at any time. Each Fund, under normal market
conditions, does not intend to invest more than 15% of its assets in repurchase
agreements.

WHEN ISSUED SECURITIES. The Funds may acquire securities on a "when-issued"
basis by contracting to purchase securities for a fixed price on a date beyond
the customary settlement time with no interest accruing until settlement. If
made through a dealer, the contract is dependent on the dealer completing the
sale. The dealer's failure could deprive the Fund of an advantageous yield or
price. These contracts may be considered securities and involve risk to the
extent that the value of the underlying security changes prior to settlement. A
Fund may realize short-term profits or losses if the contracts are sold.
Transactions in when-issued securities may be limited by certain Internal
Revenue Code requirements.

ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities or private placements. An
illiquid security is a security that cannot be sold quickly in the normal course
of business. Some securities cannot be sold to the U.S. public because of their
terms or because of SEC regulations. Northstar may determine that securities
that cannot be sold to the U.S. public, but that can be sold to institutional
investors ("Rule 144A" securities) or on foreign markets, are liquid, following
guidelines established by the Trustees of each Fund.

TRADING AND PORTFOLIO TURNOVER. Each Fund generally intends to purchase
securities for long-term investment. However, a Fund may purchase a security in
anticipation of relatively short-term price gains and short-term transactions
may result from liquidity needs, securities having reached a price or yield
objective, changes in interest rates or the credit standing of an issuer, or by
reason of economic or other developments not foreseen at the time of the initial
investment decision. Portfolio turnover rates are usually not a factor in making
buy and sell decisions. A Fund may also sell one security and simultaneously
purchase the same or comparable security to take advantage of short-term
differentials in yield or price. Increased portfolio turnover may result in
higher costs for brokerage commissions, dealer mark-ups and other transaction
costs and may also result in taxable capital gains. Short term trading may also
be restricted by certain tax rules.

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 Northstar. Northstar
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 Funds.

TEMPORARY INVESTMENTS. In periods of unusual market conditions, for temporary
and defensive purposes, when Northstar considers it appropriate, a Fund may
maintain part or all of its assets in cash, or may invest part or all of its
assets in U.S. Government Securities, commercial paper, bankers' acceptances,
repurchase agreements and certificates of deposit.

<PAGE>

INVESTMENT RESTRICTIONS. For information on certain fundamental and
non-fundamental investment restrictions applicable to each Fund, see "Investment
Restrictions" in the Statement of Additional Information.

<PAGE>

PERFORMANCE INFORMATION

For purposes of advertising, performance may be calculated on several bases,
including current yield, average annual total return and/or cumulative total
return.

Current yield shows the rate of income a Fund earns on its investments as a
percentage of the Fund's share price. It is calculated by dividing a Fund's
net investment income for a 30-day period by the average number of shares
entitled to receive dividends and dividing the result by the Fund's share
price at the end of the 30-day period. Yield does not include changes in share
price.

Yields are calculated according to standardized SEC formulas and may not equal
the income on an investor's account. Yield is usually quoted on an annualized
basis. An annualized yield represents the amount you would earn if you remained
in a Fund for a year and that Fund continued to have the same yield for the
entire year.

Average annual total return represents the average annual percentage change of
an investment over a specified period. It is calculated by taking the cumulative
total return for the stated period and determining what constant annual return
would have produced the same cumulative return. Average annual total returns
tend to smooth out variations in a Fund's return and are not the same as actual
annual results.

Cumulative total return represents the actual rate of return on an investment
for a specified period. Cumulative total return is generally quoted for more
than one year (e.g., the life of the Fund). A cumulative total return does not
show interim fluctuations in the value of an investment.

Fund performance figures are based on historical results and are not intended to
indicate future performance. Investment returns and share price will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Comparative performance information may be used in
advertising, including data from Lipper Analytical Services, Inc., Moody's Bond
Survey Bond Index, Morningstar, Inc. and other industry publications.

HOW NET ASSET VALUE IS DETERMINED

All purchases, redemptions and exchanges are processed at the net asset value
("NAV") per share next calculated after your request is received. In order to
receive a day's price, your order must be received by 4:00 p.m. EST ("Eastern
Standard Time"). A Fund's NAV is determined separately for each class as of the
close of regular trading on the New York Stock Exchange ("NYSE") (normally 4:00
p.m. EST) each day that the NYSE is open. NAV per share is calculated by
dividing the total value of the fund's securities and other assets, less all
liabilities, by the total number of shares outstanding. The specific expenses
borne by each class of shares will be deducted from that class and will result
in different NAVs and dividend

<PAGE>

payments. The NAV of a Class B, or Class C share will generally be lower than
that of a Class A share because of the higher distribution fees or certain other
class specific expenses borne by these classes. Securities are valued at market
value or, if a market quotation is not readily available, at their fair value
determined in good faith under procedures adopted by and under the supervision
of the Trustees. Money market instruments maturing within 60 days are valued at
amortized cost, which approximates market value. See the Statement of Additional
Information.

MANAGEMENT OF THE FUNDS

THE TRUSTEES. The Trustees of the Funds oversee the business affairs of the
Funds and are responsible for major decisions relating to each Fund's
investment objective and policies. The Trustees delegate the day-to-day
management of the Funds to the officers of the Trust and meet quarterly to
review the Funds' investment policies, performance, expenses and other business
affairs.

THE INVESTMENT ADVISER AND ADMINISTRATOR. Northstar Investment Management
Corporation is the investment adviser to the Funds. Northstar furnishes
continuous advice and recommendations concerning each Fund's investments.
Northstar Administrators Corporation ("NAC"), an affiliate of Northstar,
furnishes certain administrative, compliance and accounting services to the
Funds. Employees of Northstar and NAC serve as officers of the Funds, and
Northstar provides office space for the Funds.

Under the terms of investment advisory agreements between Northstar and each
Fund, each Fund has agreed to pay Northstar a monthly fee at the following
annual rates: Northstar Income and Growth Fund and Northstar High Total Return
Fund each pays a management fee at the rate of .75% on the first $250 million
of each Fund's average daily net assets; 0 .70% on the next $250 million; 0
.65% on the next $250 million; 0 .60% on the next $250 million; and 0.55% on
assets over $1 billion. Northstar Balance Sheet Opportunities Fund, Northstar
Government Securities Fund and Northstar Strategic Income Fund each pays
a management fee at the annual rate of 0.65% of average daily net assets;
Northstar High Yield Fund pays a management fee at the annual rate of 0.45% of
average daily net assets; Northstar Special Fund and Northstar Growth Fund
each pays a management fee at the annual rate of 0.75%; and Northstar Growth +
Value Fund pays a management fee at the annual rate of 1.00%. From time to time,
Northstar may waive receipt of its fees or voluntarily assume certain expenses
of the Fund. As a result of such a waiver, for the fiscal year ended December
31, 1995, the Government Securities Fund paid a management fee of .45%

Each Fund pays NAC an administrative services fee, which is accrued daily
and paid monthly, at the annual rate of .10% of each Fund's average daily net
assets. NAC also charges an annual account service fee of $5.00 for each
account of beneficial holders of shares in a Fund for providing certain
shareholder services and assisting broker-dealers in servicing Fund accounts.
Until June 2, 1997 the Administrator will receive no administrative or account

<PAGE>

fees from the Special Fund, Growth Fund, Balance Sheet Fund, Government
Securities Fund, Strategic Income Fund and High Yield Fund.

Subadviser to Special Fund and Growth + Value Fund. Navellier Fund
Management, Inc. ("NFM"), a registered investment adviser, serves as
subadviser to the Special Fund and Growth + Value Fund pursuant to separate
Subadvisory Agreements dated February 1, 1996, and July 31, 1996, respectively,
between Northstar and NFM. NFM is a recently formed company which is wholly-
owned by Louis G. Navellier. The principal address of NFM is 1 East Liberty,
Third Floor, Reno, Nevada, 89501. Mr. Navellier is also the sole owner of
Navellier & Associates, Inc., a registered investment adviser, which is
currently managing in excess of $1.4 billion for various private accounts.
Navellier & Associates, Inc. has been managing large pools of private assets
since 1987. It manages those private accounts based on a proprietary system
of computer based screens developed by Louis Navellier in which he has applied
and refined modern portfolio theory concepts to develop a proprietary system of
computer based screens to analyze over 7,000 stocks in order to determine
which stocks to buy and sell (the "Navellier system"). Louis Navellier and his
staff at Navellier & Associates, Inc. has used the Navellier system since 1987
to manage the private accounts under management.

Louis Navellier has formed NFM solely for the purpose of performing
sub-advisory investment services for various Northstar portfolios. NFM will
use for the Northstar Growth + Value Fund the same Navellier style and
essential personnel as Navellier & Associates uses to perform its sub-advisory
services for individuals and institutions.

Louis G. Navellier will serve as portfolio manager for the two funds,
with primary responsibility for the day-to-day investment management. For its
services, NFM will receive from Northstar, not the funds, a fee equal to 0.48%
of the average daily net assets of the Special Fund and 0.64% of the Growth
+ Value Fund. Northstar is responsible for overseeing the investment
management provided by NFM, and assumes all costs and expenses of the
subadvisory arrangement.

The following tables set forth composite performance data for
Navellier & Associates for the private accounts under its management during
the dates indicated. The data is provided to illustrate the past performance
of Navellier & Associates in managing the private accounts based on the
Navellier style, as measured against the S&P 500 Index.

Navellier and Associates S&P 500
Composite (a,c) Index (b,c)

1987.............................. 8.05 5.24
1988.............................. 11.40 16.51
1989.............................. 22.20 31.58
1990.............................. 12.51 -3.15
1991.............................. 66.43 30.50
1992.............................. 3.12 7.61
1993.............................. 16.83 10.09
1994.............................. 1.53 1.31
1995.............................. 43.80 37.59
1996(Six months) 14.81 10.10

<PAGE>

Navellier and Associates S&P 500
Composite (a,c) Index (b,c)

One Year 34.03% 26.02%
Three Years 21.70 17.21
Five Years 19.80 15.74
Since Inception 25.55 19.69

(a) The performance results include the actual performance of ALL equity
accounts managed by Navellier and Associates from 1987 to present on a
"time-weighted" and "dollar-weighted" basis. These performance results are
"net" of fees, taking into account management fees, broker fees, commissions
and other normal expenses that were deducted from the accounts. Prior to
January 1, 1993, any account expenses that were NOT deducted from the
accounts, such as management fees paid outside the accounts, are NOT
reflected in the subject performance results.

(b) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of common stocks that is considered to be generally representative of the
United States stock market. The Index is adjusted to reflect reinvestment of
dividends.

(c) All information set forth in the tables was supplied by Navellier and
Associates or from statistical services, reports or other sources believed
by Navellier and Associates to be reliable. However, such information has
not been verified or audited.

Historical performance is not indicative of future performance. The composite
account results presented above may not necessarily equate with the return
experienced by any one account managed by Louis G. Navellier and Associates, as
a result of differences in brokerage commissions, the size of positions taken in
relation to account size, timing of investments, additions and withdrawals, and
diversification of securities.

SUBADVISER TO THE INCOME AND GROWTH FUND. Wilson/Bennett Capital Management,
Inc. ("Wilson/Bennett"), a registered investment adviser, serves as subadviser
with respect to the common stock portion of the Income and Growth Fund pursuant
to a Subadvisory Agreement dated July 31, 1996 between Northstar and
Wilson/Bennett. Northstar will make all determinations as to the allocation of
the Fund's assets, will direct all trades and will manage the portion of the
Fund's assets in convertible and fixed income securities. Wilson/Bennett's
principal address is Suite 250, 8260 Greensboro Drive, McLean, Virginia 22102.
Wilson/Bennett currently manages approximately $57 million of assets for
individuals, pension plans and corporations. For its services, Wilson/Bennett
will receive from Northstar, not the Funds, a monthly fee at an annual rate
equal to 0.20% of the first $125 million of average daily net assets of the Fund
managed by Wilson/Bennett, 0.25% of the next $125 million, and 0.30% for assets
in excess of $250 million.

PORTFOLIO MANAGERS. Thomas Ole Dial is the portfolio manager of the High Total
Return Fund and the High Yield Fund and co-manager of the Balance Sheet
Opportunities Fund. Mr. Dial joined Northstar in October 1993 and has managed
the High Total Return Fund since its inception and the High Yield Fund since
July 31, 1996 and has co-managed the Balance Sheet Opportunities Fund since July
31, 1996. Prior to joining Northstar, Mr. Dial served as

<PAGE>

Executive Vice President, Chief Investment Officer - Fixed Income of National
Securities & Research Corporation, and Senior Portfolio Manager of the National
Bond Fund from August 1990 through August 1993. The National Bond Fund had
investment objectives, policies and strategies that were substantially similar
to those of the Northstar High Total Return Fund. The cumulative total return
for the National Bond Fund from August 1990 through August 1993 was 96.47%. At
August 31, 1993, that Fund had $612,666 million in net assets. As Senior
Portfolio Manager of the National Bond Fund, Mr. Dial had full discretionary
authority over the selection of investments for that fund. Average annual
returns for the one-year and three-year periods ended August 31, 1993 and for
the entire period during which Mr. Dial managed that fund as compared with the
performance of the Lehman High Yield Bond Index were:

THE NATIONAL BOND FUND (a,b) LEHMAN HIGH YIELD BOND INDEX(c)

One Year 17.65% 14.60%
Three Years 25.25 20.15

(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions a is net of fund expenses.
(b) A Plan of Distribution pursuant to Rule 12b-1 became effective on June 1,
1992. At that time, the Fund also removed the sales load previously imposed
on dividends reinvested in additional shares of the Fund. Prior to June 1,
1992, the expense ratio of the National Bond Fund was 1.15%. Thereafter, the
expense ratio was 1.45%
(c) The Lehman Brothers High Yield Bond Index is an unmanaged index of fixed
rate, publicly issued, noninvestment grade debt registered with the SEC that
is considered to be generally representative of the United States market for
noninvestment grade debt. The Index is adjusted to reflect reinvestment of
dividends.

Historical performance is not indicative of future performance. The National
Bond Fund is a separate fund and its historical performance is not indicative of
the potential performance of the Northstar Funds. Share prices and investment
returns will fluctuate reflecting market conditions, as well as changes in
company-specific fundamentals of portfolio securities.

Geoffrey Wadsworth is the portfolio manager of the Growth Fund. Mr.
Wadsworth joined Northstar in October 1993 and has managed the Growth Fund since
January 1996. Prior to joining Northstar he was a portfolio manager and Vice
President of National.

Margaret D. Patel is the portfolio manager of the Government Securities Fund and
the Strategic Income Fund and co-manager of the Income and Growth Fund. With
respect to the Income and Growth Fund, Ms. Patel will make asset allocation
determinations and will be responsible for selecting convertible and fixed
income investments. Ms. Patel joined Northstar in June 1995 and has managed the
Government Securities Fund since 1988 and the Strategic Income Fund since
July 31, 1996, and has co-managed the Income and Growth Fund since July. Prior
to joining Northstar, Ms. Patel was Senior Vice President of Boston Security
Counselors, Inc.

Peter Bakst is a co-manager of the Balance Sheet Opportunities Fund. Mr. Bakst
joined Northstar in June 1996 and has co-managed the Fund since July 1996. From
November 1995 through May 1996, Mr. Bakst served as Director-High Yield Group
for CS First Boston. From

<PAGE>

March 1995 through September 1995 he was President of Presidio Capital
Management and from April 1989 through February 1995 he was a Managing Director
of BT Securities.

Louis G. Navellier is the portfolio manager of the Special Fund and the Growth +
Value Fund. Mr. Navellier has managed investments since 1986 and is the sole
shareholder of two other registered investment advisory firms.

John W. Fisher is a co-manager of the Income and Growth Fund. Mr. Fisher is
responsible for managing the portion of the Fund's assets allocated for
investment in common stocks. Mr. Fisher is the controlling principal, President
and sole director of Wilson/Bennett.

OTHER SERVICE PROVIDERS. The Funds' distributor is Northstar Distributors,
Inc., an affiliate of Northstar. The custodian for the Income and Growth and
High Total Return Funds is Custodial Trust Company, a bank organized under the
laws of New Jersey, located at 101 Carnegie Center, Princeton, New Jersey
08540-6231. The custodian and fund accounting agent for the Special, Growth +
Value, Growth, Balance Sheet, Government Securities, Strategic Income and High
Yield Funds is State Street Bank and Trust Company, located at 225 Franklin
Street, Boston, Massachusetts 02110.

The transfer agent and Blue Sky administrator for all Funds, and the fund
accounting agent for the Income and Growth and High Total Return Funds, is First
Data Investor Services Group, Inc. ("First Data" or the "Transfer Agent"),
located at One Exchange Place, Boston, Massachusetts, 02109. Advest Transfer
Services, Inc., One Commercial Plaza, 280 Trumbull Street, Hartford, Connecticut
06103, serves as the sub-transfer agent for the Funds offering Class T shares.

HOW TO PURCHASE SHARES

Each Fund continuously offers three classes of shares. Each class is described
below under "Alternative Purchase Arrangements." Shares of each Fund, excluding
Class T shares, may be purchased from the Fund or from investment dealers having
a sales agreement with the Underwriter. Orders received in good form prior to
4:00 p.m. EST or placed with a financial service firm before such time and
transmitted before the Fund processes that day's share transactions, will be
processed at that day's closing NAV, plus any applicable sales charge. The
minimum initial purchase is $2,500, however the Funds reserve the right in their
discretion to accept purchases of a lesser value. The minimum initial purchase
does not apply to IRA accounts, for which the minimum is $250; additional
investments for as little as $100 ($25 for IRA accounts) may be made at any time
through an investment dealer or by sending a check payable to Northstar
Funds, c/o First Data Investor Services Group, Inc., P.O. Box 9756, Providence,
RI 02940, for the purchase of full and fractional shares. Most shareholders
choose not to hold their shares in certificate form because account transactions
such as exchanges and redemptions cannot be completed until the certificate has
been returned to the Funds and certificate holders may not participate in
certain shareholder services, such as telephone exchanges and redemptions,
check-writing and the withdrawal program. Certificates will be issued only upon
written request. Shareholders requesting certificates may incur a fee for lost
or stolen certificates and no certificates are issued for fractional shares
(which shares remain

<PAGE>

in the shareholder's account in book entry form). The Fund or the Underwriter
may refuse any purchase order for shares.

At various times, the Underwriter implements programs under which (a) a dealer's
sales force may be eligible to win cash or material awards for certain sales
efforts or under which (b) the Underwriter will reallow an amount not exceeding
the total applicable sales charges on the sales generated by the dealer during
such programs to any dealer that (i) sponsors sales contests or recognition
programs conforming to criteria established by the Underwriter or (ii)
participates in sales programs sponsored by the Underwriter. Pursuant to a
Purchase Agreement that was entered into in connection with the assumption of
management of the Funds by Northstar, the Underwriter has agreed to provide
Advest, Inc. ("Advest") with certain additional compensation until June 2, 1998.
Any additional compensation is payable annually and is based upon (a)(i) the
level of sales by Advest of shares of the Funds during each year and (ii) the
rate of redemption of Class T shares during such year and (b) the level of sales
of those Funds previously distributed through Advest by persons other than
Advest. Such compensation, which is paid out of the assets of the Underwriter
and not the Funds, is in addition to the compensation otherwise payable to a
dealer in connection with sale of the Funds' shares. Sales personnel of
broker-dealers distributing shares of the Funds may receive differing
compensation for selling different classes of shares.

ALTERNATIVE SALES ARRANGEMENTS

The alternative purchase arrangements permit an investor to choose among three
methods (each a class) of purchasing shares. Each class is described below.
Which class is more beneficial to an investor depends on the amount and intended
length of the investment. Large investments qualifying for a reduced Class A
sales charge avoid the higher distribution fee. Investments in Class B and Class
C shares have 100% of the purchase invested immediately. Purchases of $500,000
or more must be for Class A shares. Please consult your financial service firm.

Prior to June 5, 1995, the Special, Growth, Balance Sheet, Government
Securities, Strategic Income, and High Yield Funds each offered only one
Class of shares, currently designated as "Class T" shares. Class T shares are no
longer offered for sale by a Fund, except in connection with reinvestment of
dividends and other distributions, upon exchanges of Class T shares of another
Fund, and upon exchange of shares from the Class T Account of the Money Market
Portfolio. When Class T shares are redeemed within four years after their
purchase, a contingent deferred sales load will be imposed at rates declining
from a maximum of 4% of the lesser of the net asset value or total cost of
shares redeemed within a year of purchase to 1% of such amount for shares
redeemed after three years.

All contingent deferred sales charges are deducted from the redemption proceeds,
not the amount remaining in the account. No contingent deferred sales charge is
imposed on shares acquired through reinvestment of dividends and distributions,
or on amounts representing appreciation. In determining whether a contingent
deferred sales charge is applicable to a redemption, the calculation will be
determined in the manner that results in the lowest possible rate being charged.
Accordingly, in determining whether a contingent deferred sales charge

<PAGE>

will be payable and, if so, the percentage charge applicable, shares acquired
through reinvestment and then shares held the longest will be considered the
first to be redeemed.

Class B and Class T shares automatically convert to Class A shares after eight
years from purchase in the case of Class B shares, and on the later of May 31,
1998 or eight years after purchase in the case of Class T shares. The purpose of
the conversion is to relieve the holders from the burden of higher distribution
fees once the Underwriter had been reimbursed for most of its distribution
related expenses. For purposes of conversion to Class A shares, shares purchased
through the reinvestment of dividends and distributions paid in respect of Class
B or Class T shares in a shareholder's Fund account will be considered to be
held in a separate subaccount. Each time any Class B or Class T shares in the
shareholder's Fund account (other than those in the subaccount) convert to Class
A, an equal pro rata portion of the Class B or Class T shares in the subaccount
will also convert to Class A.

As set forth below, the initial or contingent deferred sales charges may be
reduced or eliminated for certain persons or organizations purchasing Fund
shares alone or in combination with other Northstar Funds. See the Statement
of Additional Information for more details regarding waivers and purchases at
net asset value.

Investors choosing the initial sales charge alternative may under certain
circumstances be entitled to pay reduced sales charges. The sales charge varies
with the size of the purchase and reduced charges apply to the aggregate of
purchases of a Fund made at one time by any "Purchaser," which term includes (i)
an individual and his/her spouse and their children under the age of 21, (ii) a
trustee or fiduciary purchasing for a single trust, estate or single fiduciary
account (including pension, profit-sharing or other employee benefit trusts
created pursuant to a plan qualified under Section 401 of the Internal Revenue
Code, a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension Accounts ("SARSEP")) and 403(b) and 457 plans,
although more than one beneficiary or participant is involved; and (iii) any
other organized group of persons, whether incorporated or not, provided the
organization has been in existence for at least six months and has some purpose
other than the purchase at a discount of redeemable securities of a registered
investment company. The circumstances under which "Purchasers" may pay reduced
sales charges are described below.

RIGHTS OF ACCUMULATION. A Purchaser may qualify for reduced initial sales
charges based upon the Purchaser's existing investment in shares of the Funds at
the time of purchase. The applicable sales charge is determined by aggregating
the dollar amount of the new purchase and the greater of the Purchaser's total
(i) net asset value or (ii) cost of all shares owned in the Funds sold subject
to a front-end sales charge and/or designated as "Class A" shares then held by
such Purchaser, and applying the sales charge applicable to such aggregate.

In order to obtain this discount, the Underwriter (if a purchase is made through
an investment dealer) or Transfer Agent (if made by mail) must be provided with
sufficient information, including the Purchaser's total cost at the time of
purchase, to permit verification that the Purchaser qualifies for a cumulative
quantity discount, and confirmation of the order is subject to such
verification. The privilege of cumulative quantity discounts may be modified or

<PAGE>

discontinued at any time.

LETTER OF INTENT. Purchasers may also qualify for reduced sales charges by
signing a Letter of Intent ("LOI"). This enables the Purchaser to aggregate
purchases over a 13-month period of all Funds sold subject to a front-end sales
charge and/or designated as "Class A" shares. The sales charge is based on the
total amount invested during the 13-month period. A 90-day back-dated period can
be used to include earlier purchases (with a partial retroactive downward
adjustment in an amount equal to the commission paid to the broker-dealer); the
13-month period would then begin on the date of the first purchase during the
90-day period. No retroactive adjustment will be made if purchases exceed the
amount indicted in the LOI. A shareholder must notify the Transfer Agent
whenever a purchase is being made pursuant to a LOI.

The LOI is not a binding obligation on the investor to purchase the full amount
indicated; however, on the initial purchase, if required (or on subsequent
purchases if necessary), 5% of the dollar amount specified in the Statement will
be held in escrow by the Transfer Agent in shares registered in the
shareholder's name in order to assure payment of the proper sales charge. If
total purchases pursuant to the LOI (less any dispositions and exclusive of any
distributions on such shares automatically reinvested) are less than the amount
specified, the investor will be requested to remit to the Underwriter an amount
equal to the difference between the sales charge paid and the sales charge
applicable to the aggregate purchases actually made. If not remitted within 20
days after written request, an appropriate number of escrowed shares will be
redeemed in order to realize the difference.

CDSC WAIVERS. The contingent deferred sales charge is waived on redemptions of
Class B and Class C shares (a) following the death or disability, as defined in
Section 72(m)(7) of the Internal Revenue Code, of a shareholder (or all
shareholders in the case of joint accounts) if redemption is made within one
year of the death or disability of the shareholder, as relevant; (b) in
connection with redemptions of shares made pursuant to a shareholder's
participation in any systematic withdrawal plan adopted by the Funds provided,
however, that such withdrawals shall not exceed in any calendar year 7% (9% in
the case of the High Total Return Fund and the High Yield Fund) of the original
principal amount invested (any excess being assessed the applicable deferred
sales charge, if any), and provided further that the redeeming shareholder
reinvests all dividends and capital gain distributions during his/her
participation in the withdrawal plan; (c) in connection with a partial or
complete redemption in connection with taxable distributions under Individual
Retirement Accounts ("IRAs") or other retirement plans in connection with a
lump-sum or other form of taxable distribution after attaining the age of
59 1/2; (d) after attaining the age of 70 1/2 in the case of redemption
from an IRA or other retirement plan such as a Keogh plan or custodial
account pursuant to Section 403(b)(7) of the Internal Revenue Code, or on any
redemption resulting from the tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code; and (e) in connection with
the exercise of certain exchange privileges among Class B or Class C shares of
the Funds, including shares of the Class B or Class C Account of the Money
Market Portfolio. In addition to subsections (a), (b) and (e) of the above,
the contingent deferred sales charge is waived on redemptions of Class B or
Class C shares purchased prior to December 1, 1996 (i) in connection with
distributions under IRAs of other retirement plans in connection with a
lump-sum or other form of distribution following retirement, or (ii) after
attaining the age of 59 1/2 in the case of an IRA, Keogh plan or custodial
account pursuant to Section 403(b)(7) of the Internal Revenue Code, or on any
redemption resulting from the tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code.

<PAGE>

CLASS A SHARES. Class A shares are offered at net asset value plus an initial or
a contingent deferred sales charge as set forth below. Class A shares bear a
0.25% annual service fee and a .05% annual distribution fee.

AMOUNT RETAINED
% OF AMOUNT % OF BY DEALERS AS % OF
AMOUNT PURCHASED INVESTED OFFERING PRICE OFFERING PRICE
<S> <C> <C> <C>
Up to $99,999 4.99% 4.75% 4.00%
$100,000 to $249,999 3.9 3.75 3.1
250,000 to 499,999 2.83 2.75 2.3
500,000 to 999,999 2.04 2 1.7
*1,000,000 and above -- -- --

</TABLE>

- -------------------------
* The Underwriter pays investment dealers or financial service firms a
commission from its own resources of up to 1.00% of the amount invested for
amounts from $1,000,000 to $2,499,999, up to 0.50% on amounts of $2,500,000 to
$4,999,999 and up to 0.25% on amounts of $5 million and above. Purchases of over
$1 Million are subject to a maximum contingent deferred sales charge of 1%
(scaled down to 0.50% for amounts of $2.5 million or more, and 0.25% on amounts
over $5 million) on redemptions made within eighteen months.

CLASS B SHARES. Class B shares are offered at net asset value, without an
initial sales charge, subject to a .75% annual distribution fee for
approximately 8 years (at which time they convert to Class A shares bearing only
a .05% annual distribution fee), a 0.25% annual service fee and a contingent
deferred sales charge if shares are redeemed within five years after purchase.
As set forth below, the amount of the deferred sales charge varies depending on
the number of years after purchase that the redemption occurs. For determining
the date of purchase, all payments during a month will be aggregated and deemed
to have been made on the last day of the month. The deferred sales charge will
be assessed on an amount equal to the lesser of the current market value or the
cost of the shares being redeemed. The Underwriter currently pays investment
dealers a sales commission of 4% of the sale price of Class B shares sold by the
dealers, subject to future amendment or termination. The Underwriter will retain
all or a portion of the continuing distribution fee assessed to Class B
shareholders and will receive the entire amount of the contingent deferred sales
charge paid by shareholders on the redemption of shares to reimburse the
Underwriter in whole or in part for the payment of such sales commission, plus
financing costs and related marketing expenses.

CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
SUBJECT TO
YEAR SINCE PURCHASE CHARGE

<PAGE>

First..................................... 5%
Second.................................... 4%
Third..................................... 3%
Fourth.................................... 2%
Fifth..................................... 2%
Thereafter................................ 0%

To provide an example, assume an investor purchased 100 shares at $10 per share
(at a cost of $1,000) and in the second year after purchase, the net asset value
per share is $12 and, during such time, the investor has acquired 10 additional
shares upon dividend reinvestment. If, at such time the investor makes his first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to
charge because of dividend reinvestment. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds will be charged at a rate of 4% (the applicable rate in the
second year after purchase).

CLASS C SHARES. Investors choosing Class C shares purchase shares at net asset
value without a sales charge at the time of purchase, subject to a 0.75% annual
distribution fee, a 0.25% annual service fee, and a 1.00% contingent deferred
sales charge on redemptions made within one year from the first day of the month
after purchase.

The Underwriter currently pays investment dealers a sales commission of 1% of
the sale price of Class C shares sold by such dealers, subject to future
amendment or termination. The Underwriter will retain the distribution fee
assessed against Class C shareholders in the first year of investment, and the
entire amount of the contingent deferred sales charge paid by Class C
shareholders upon redemption in year one, in order to compensate the Underwriter
for providing distribution related services to the Funds in connection with the
sale of Class C shares, and to reimburse the Underwriter in whole or in part for
the commissions (and any related financing costs) paid to dealers at the time of
purchase. There is no conversion feature associated with Class C shares;
therefore, Class C shareholders will be subject to the higher distribution fee
associated with such shares for the life of the shareholder's investment.

INVESTOR SERVICES AND ACCOUNT POLICIES

An account will be opened for each investor after an initial investment is made.
Account services are described below. Class T shareholders wishing to add to
their investment or to purchase shares of another Fund must opt to purchase
Class A, Class B or Class C shares of the Fund, and the Transfer Agent will
establish a new account for the shareholder in another Class of a Fund selected
by the shareholder. Shares purchased will be held in the shareholder's account
by the Transfer Agent. Requests for account assistance or additional information
should be directed to Northstar at (800) 595-7827.

<PAGE>

The Funds will send you a confirmation statement after every transaction that
affects your account balance or your account registration. Information regarding
the tax status of income dividends and capital gains distribution will be mailed
to shareholders on or before January 31st of each year. Account tax information
will also be sent to the IRS. Financial reports for the Funds will be mailed
semiannually to shareholders. To reduce expenses, only one copy of most Fund
reports will be mailed to accounts listed under the same social security number
or to households for multiple accounts with the same surname. Please contact
Northstar to request additional copies of shareholder reports.

DIVIDEND AND DISTRIBUTION REINVESTMENT OPTIONS. Shareholders of Class A, Class B
and Class C shares may direct that income dividends and capital gain
distributions be paid to them through any one of the following options: income
dividends and capital gain distributions both paid in additional shares of the
same class of a designated Fund at net asset value; income dividends paid in
cash and capital gain distributions paid in additional shares of the same class
of a designated Fund at net asset value; or income dividends and capital gain
distributions both paid in cash. If a shareholder does not indicate which option
is preferred upon the opening of an account, both income dividends and capital
gain distributions will be paid in additional shares of the Fund from which the
investor earned such distributions. Class T shareholders may elect only to
receive all distributions in cash or to reinvest in additional shares,
regardless of whether such distribution is an income dividend or a capital gains
distribution. In addition, Class T shareholders opting to reinvest dividends and
capital gains may only invest such proceeds in the Fund making the distribution.
Payment options may be changed at any time by notifying Northstar in writing.

AUTOMATIC INVESTMENT PLAN. Shareholders may elect to purchase shares through the
establishment of an Automatic Investment Plan, in which case the minimum
investment in order to open an account is $25. An Automatic Investment
Authorization Form (available on request from Northstar) provides for funds to
be automatically drawn on a shareholder's bank account and deposited in his or
her Fund account ($25 per month minimum). The shareholder's bank may charge a
nominal fee in connection with the establishment and use of automatic deposit
services. The Automatic Investment Plan is not available for Class T share
accounts.

WITHDRAWAL PROGRAM. A shareholder owning $5,000 or more worth of shares of a
Fund in book-entry form may establish a withdrawal program with the Fund and
provide for the payment monthly or quarterly of any requested dollar amount ($25
minimum per payment) from the account to his or her order. Withdrawal programs
are not available for Class T share accounts. A sufficient number of full and
fractional shares will be redeemed to make the designated payment. The purchase
of shares while participating in a withdrawal program will ordinarily be
disadvantageous to the investor, since a sales charge will be paid by the
investor on the purchase of shares at the same time the shares are being
redeemed in the case of Class A shares. For this reason, shareholders may not
maintain an Automatic Investment Plan while participating in the withdrawal
program. In the case of shares subject to a contingent deferred sales charge,
unless the investor qualifies for a waiver, the investor may incur a sales
charge at the time of each withdrawal. A Fund may terminate an investor's
withdrawal program if the account value falls below $5,000 due to the transfer
or redemption of shares

<PAGE>

from the account. See the enclosed application form.

TAX-SHELTERED RETIREMENT PLANS. Shares of the Funds may be offered in connection
with the following qualified prototype retirement plans: IRA and Rollover IRA,
SEP-IRA, Profit-Sharing and Money Purchase Pension Plans which can be adopted by
self-employed persons ("Keogh") and by corporations. Call or write Northstar for
further information.

EXCHANGE PRIVILEGES. Shareholders may exchange shares of a Fund for the same
class of shares of another Fund or for shares of The Cash Management Fund of
Salomon Brothers Investment Series (an open-end management investment company
comprised of various portfolios, hereafter referred to as "Money Market
Portfolio," that is not one of the Funds, but is available by purchase or
exchange through the Underwriter). Exchange requests in proper form will be
honored prior to 4:00 p.m. EST. For telephone exchanges or authorization forms,
contact Northstar at 1-800-595-7827. Exchanges will be based upon each Fund's
NAV per share next computed following receipt of a properly executed exchange
request, without a sales charge; provided, however, in the case of exchanges
after a direct purchase into the Money Market Portfolio from Class A shares of a
Fund, a sales charge will be imposed in accordance with the sales charge table
that is applicable to direct purchases. Collection of the contingent deferred
sales charge will be deferred on shares subject to a charge that are exchanged
for shares of the same class of another Fund, or converted to shares of the
Money Market Portfolio. Under these circumstances, the combined holding period
of shares in each Fund, or in a Fund and the Money Market Portfolio, shall be
used to calculate the conversion period, if applicable, and to determine the
deferred sales charge due upon redemption, if any. The exchange of shares from
one Fund to another is treated as a sale of the exchanged shares and a purchase
of the acquired shares for Federal income tax purposes. Shareholders may,
therefore, realize a taxable gain or loss. See "Exchanges" and "Dividends,
Distributions and Taxes" in the Statement of Additional Information.

Each Fund reserves the right to terminate or modify its exchange privileges at
any time upon prominent notice to shareholders. Such notice will be given at
least 60 days in advance. Each Fund and the Money Market Portfolio has different
investment objectives and policies. Shareholders should obtain and review the
prospectus of the Fund into which the exchange is to be made before any exchange
requests are made.

TELEPHONE TRANSACTIONS. Shareholders holding shares in book-entry form may
authorize the Funds to accept telephone redemptions and exchanges. Telephone
transactions are not available for Class T share accounts. Shareholders may
redeem up to $50,000 worth of their shares by telephoning Northstar prior to
4:00 p.m. EST. Redemption proceeds must be payable to the record holder of the
shares and mailed to the shareholder's address of record or wire transferred to
the shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System, normally within one business day, but in no event longer
than three days after the request. The minimum amount for a wire transfer is
$1,000. If at any time the Funds shall determine that it is necessary to
terminate or modify telephone transaction privileges, shareholders would be
promptly notified. Information on these services is included in the Application
and is available from Northstar. Neither Northstar, the Underwriter nor the
Funds will be liable for any loss, damages, expense or cost arising out of any
telephone

<PAGE>

transaction effected in accordance with the Funds' procedures, upon instructions
believed to be genuine. Shareholders who utilize telephone privileges bear the
risk of any loss, damages, expense or cost arising from their election,
including risk of unauthorized use; provided, however that the Funds shall
employ reasonable procedures to confirm that all telephone instructions are
genuine. For this purpose, the Fund or its agent will require all individuals
delivering telephone instructions to provide specific information to identify
themselves as the account holder, such as the name in which the account is
registered, the account holder's social security number, account number, and
broker of record. In the absence of such procedures, or should the Fund or its
agents for any reason fail to follow such procedures, the Fund or its agents may
be liable for losses due to unauthorized or fraudulent telephone instructions.

INVOLUNTARY REDEMPTIONS. Due to the high cost of maintaining accounts with small
account values, each Fund reserves the right to close all accounts that have
been in existence for at least one year and have a value that is less than $500.
Involuntary redemptions will not be effected because of market movements; they
will only be effected in the event of redemptions resulting in an account value
of less than $500. Shareholders will receive 60 days' written notice during
which time they may bring the value up to $500 or more. If the account value is
not raised during that time, the Fund will redeem all shares in the account and
send the proceeds to the shareholder's address of record.

Each Fund reserves the right to close all accounts of a shareholder who has
failed to provide a social security number or other taxpayer identification
number and certification (if required) that such number is correct, or if a
shareholder is deemed to engage in activities which are illegal or otherwise
detrimental to the Funds.

REINSTATEMENT PRIVILEGE. Shareholders have a one time privilege of reinstating
their investment into any of the Funds, subject to the terms of exchange (see
"Exchange Privileges") at the NAV next determined after the request for
reinstatement is made. For Federal income tax purposes, a redemption and
reinstatement will be treated as a sale and purchase of shares; special rules
may apply in computing the amount of gain or loss in these situations. See
"Dividends, Distributions and Taxes" in the Statement of Additional Information.
A written request for reinstatement must be received by the Underwriter within
30 days of the redemption accompanied by payment for the shares (not in excess
of the redemption). Shareholder accounts will be credited with an amount equal
to the deferred sales charge (or pro rata portion thereof) paid upon redemption.

HOW TO SELL SHARES

Shareholders may sell their shares back to the Fund at the NAV next determined
after the Fund receives a redemption request with any other required
documentation in proper form. Investors will be subject to the applicable
deferred sales charge, if any, for such shares. The Transfer Agent requires a
written request, with the signature guaranteed by a bank, a national stock
exchange member or other eligible guarantor institution. The Transfer Agent may

<PAGE>

waive the signature guarantee requirement in the case of book-entry share
redemption requests of less than $50,000 if the proceeds are payable to the
account as registered and mailed to the address of record. Redemption requests
must be signed by each person in whose name the account is registered.
Shareholders may also sell shares back to a Fund through dealers who are members
of the selling group. The redemption price in such a case will be the price as
of the close of the New York Stock Exchange on that day, provided the order is
received by the dealer prior to the close of the Exchange and is transmitted to
the Underwriter prior to the close of its business. The dealer is responsible
for the timely transmission of orders to the Underwriter. No service charge is
made by a Fund on redemptions, but shares tendered through investment dealers
may be subject to a service charge by such dealers. Payment for shares redeemed
is normally made within three days. However, for shares recently purchased by
check, the Fund cannot send proceeds until the check has cleared, which may take
up to 15 days.

Redemptions by corporations, partnerships or other organizations, executors,
administrators, trustees, custodians, guardians, or from IRA's or other
retirement plans may require additional documentation. To avoid delay in
redemption or transfer, shareholders having questions about specific
requirements, including eligible guarantor institutions, should contact
Northstar at (800) 595-7827. Redemption requests will not be honored until all
required documents in the proper form have been received.

DISTRIBUTION PLANS

Each Fund has adopted a distribution plan under Rule 12b-1 of the 1940 Act for
each class of shares of that Fund (collectively, the "Plans"). The Plans permit
each Fund to compensate the Underwriter in connection with activities intended
to promote the sale of shares of each class of shares of the Fund. Pursuant to
the Plans, each Fund shall pay the Underwriter 0.30% annually of the average
daily net assets of each Fund's Class A shares, 1.00% annually of the average
daily net assets of each Fund's Class B and Class C shares, and 0.95% annually
of the average daily net assets of each Fund's Class T shares in the case of the
Special Fund, Growth Fund and Strategic Income Fund, 0.75% annually of the
average daily net assets of the Class T shares in the case of the Balance
Sheet Fund and 0.65% annually of the average daily net assets of the Class T
shares in the case of the Government Securities Fund and High Yield Fund. Under
the NASD rules, fees of this type are limited to 0.75% annually for distribution
fees and 0.25% annually for service fees, subject to aggregate limits. The
Underwriter uses the fee to defray the costs of commissions and service fees
paid to financial service firms which have sold Fund shares, and to defray other
expenses such as sales literature, prospectus printing and distribution,
shareholder servicing costs and compensation to wholesalers. Should the fees
exceed the Underwriter's expenses in any year, the Underwriter would realize a
profit. With respect to the Class T Plan, it is anticipated that all of the
payments received by the Underwriter under the Plan will be paid to Advest as
compensation for servicing Class T shareholder accounts and reimbursement for
its prior distribution and shareholder servicing activities in connection with
Class T shares.

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

THE FOLLOWING DICUSSION IS INTENDED FOR GENERAL INFORMATION ONLY. EACH INVESTOR
SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE TAX CONSEQUENCES OF AN
INVESTMENT IN A FUND.

Each Fund intends to continue to qualify annually and elect to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). To qualify, each Fund must meet certain income, distribution and
diversification requirements. In any year in which a Fund qualifies as a
regulated investment company and timely distributes all of its taxable income,
the Fund generally will not pay any U.S. federal income or excise tax. Each Fund
intends to distribute to shareholders substantially all of its net investment
income and any net capital gains at least annually. It is intended that
dividends from net investment income will be paid monthly on the High Total
Return Fund, the Government Securities Fund, the High Yield Fund and the
Strategic Income Fund, annually on the Special Fund, Growth + Value Fund, and
Growth Fund, and quarterly on the Income and Growth Fund and Balance Sheet
Funds' shares.

Dividends paid out of a Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to a
shareholder as ordinary income. If a portion of the Fund's income consists of
dividends paid by U.S. corporations, a portion of the dividends paid by the Fund
may be eligible for the corporate dividends-received deduction. Distributions of
net capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, designated as capital gain dividends are taxable as
long-term capital gains, regardless of how long the shareholder has held the
Fund's shares. Dividends are taxable to shareholders in the same manner whether
received in cash or reinvested in additional Fund shares.

Each year the Fund will notify shareholders of the tax status of dividends and
distributions. Each Fund may be required to withhold U.S. federal income tax at
the rate of 31% of all taxable distributions payable to shareholders who fail to
provide the Fund with their correct taxpayer identification number or to make
required certifications, or who have been notified by the IRS that they are
subject to backup withholding.

Investors who purchase shares of a Fund just before the distribution will pay
full price for the shares and receive a portion of the purchase price back as a
taxable distribution. Unless your account is set up as a tax-deferred account,
dividends paid to you would be included in your gross income for tax purposes
even though you may not have participated in the increase in the net asset value
of the Fund. Further information relating to tax consequences is contained in
the Statement of Additional Information. Fund distributions also may be subject
to state, local and foreign taxes. Fund distributions that are derived from
interest on obligations of the U.S. Government and certain of its agencies,
authorities and instrumentalities may be exempt from state and local taxes in
certain states.

<PAGE>

A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by a Fund in October, November or December with a record
date in such a month and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received.

Investments in zero coupon securities will result in income to a Fund each year
equal to a portion of the excess of the face value of the securities over their
issue price, even though the Fund receives no cash interest payments from the
securities.

Upon the sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares.

GENERAL INFORMATION

ORGANIZATION OF THE FUNDS. The Income and Growth Fund, High Total Return
Fund and Growth + Value Fund are series of Northstar Trust (the "Trust"), a
Massachusetts business trust. The other Funds are also organized under
Massachusetts law as a business trust. The Trust was organized in 1993; the
Special, Growth, Balance Sheet and Government Securities Funds in 1986; the
High Yield Fund in 1989; and the Strategic Income Fund in 1994. The Trust's
Declaration of Trust, as amended, and each Fund's Amended and Restated
Declaration of Trust provides that the Trustees are authorized to create an
unlimited number of series and, with respect to each series, to issue an
unlimited number of full and fractional shares of one or more classes and to
divide or combine the shares into a greater or lesser number of shares without
thereby changing the proportionate beneficial interests in the series. All
shares have equal voting rights, except that only shares of the respective
series or separate classes within a series are entitled to vote on matters
concerning only that series or class. As of the date of this Prospectus, each
Fund within the Trust has three classes of shares; each of the remaining Funds
has four classes of shares.

Neither the Trust nor the Funds are required to hold shareholder meetings, but
special meetings may be called under certain circumstances. Meetings of the
shareholders will be called upon written request of shareholders holding in the
aggregate not less than 10% of the outstanding shares of the affected Fund or
class having voting rights.

REGISTRATION STATEMENT. This prospectus does not contain all the information
included in the Registration Statement filed for each Fund with the Securities
and Exchange Commission under the Securities Act of 1933 and the 1940 Act, with
respect to the securities offered hereby, certain portions of which have been
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Each Registration Statement, including the exhibits filed therewith,
may be examined at the office of the Securities and Exchange Commission in
Washington, D.C.

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
New Account Application
---------------------------------------------------------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
---------------------------------------------------------------------------------------------------------------------------------
Type of Account (Choose One Only):
/ / INDIVIDUAL / / JOINT ACCOUNT / / FOR A MINOR / / TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY
USE LINE A USE LINES A & B USE LINE C USE LINE D

Print name exactly as account is to be registered:

A._________________________________________________ ___-____-_____
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER

B._________________________________________________ ___-____-_____
NAME (FIRST, MIDDLE, LAST) SOCIAL SECURITY NUMBER

C._________________________________________________
CUSTODIAN'S NAME (FIRST, MIDDLE, LAST)

_________________________________________________ ____-____-_____
MINOR'S NAME (FIRST, MIDDLE, LAST) MINOR'S SOCIAL SECURITY NUMBER

_________________________________________________ ___-_________
TAX I.D. NUMBER

UNDER THE _____________ UNIFORM GIFTS/TRANSFERS TO MINORS ACT OR
NAME OF STATE
D._________________________________________________ ___-___-_____
NAME (IF A TRUST, INCLUDE DATE OF AGREEMENT) SOCIAL SECURITY NUMBER

---------------------------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
---------------------------------------------------------------------------------------------------------------------------------

___________________________________________________
STREET

( )______________________________________________
DAYTIME PHONE NUMBER

___________________________________________________
CITY STATE ZIP

---------------------------------------------------------------------------------------------------------------------------------
3 PURCHASE OF SHARES
---------------------------------------------------------------------------------------------------------------------------------

MINIMUM INITIAL INVESTMENT $2,500 / / MAKE CHECK PAYABLE TO NORTHSTAR FUNDS. Check enclosed for $__________

/ / Shares purchased and paid for through my/our investment dealer.
Trade Date_______ Order#_______

Number of Shares: Class A_______ Class B_______ Class C_______

Please check the box beside the name of each Northstar Advantage Fund being purchased and enter the dollar amount of each
purchase. All distributions will be reinvested in additional shares unless instructed otherwise.

/ / SPECIAL FUND $_______ / / GROWTH & VALUE FUND $_______ / / GROWTH FUND $_______
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /

DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________

/ / INCOME AND GROWTH FUND $_______ / / BALANCE SHEET OPPORTUNITIES FUND $_______ / / GOVERNMENT SECURITIES FUND $_____
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /

/ / STRATEGIC INCOME FUND $_______ / / HIGH YIELD FUND $_______ / / HIGH TOTAL RETURN FUND $_______
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / Class A / / Class B / / Class C / /
DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other* DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other* CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________

/ / MONEY MARKET PORTFOLIO FUND $_______
(Money Market Account)
Class A / / Class B / / Class C / /

DIVIDENDS / / Cash / / Other*
CAPITAL GAINS / / Cash / / Other*
______________________________________________________________________________________________________________________

*Please reinvest my dividends from ________________ to ________________
(Name of Fund) (Name of Fund)

---------------------------------------------------------------------------------------------------------------------------------
4 LETTER OF INTENT, RIGHT OF ACCUMULATION (CLASS A SHARES ONLY)
---------------------------------------------------------------------------------------------------------------------------------
LETTER OF INTENT
Although I/we have made no commitment to do so, I/we intend to invest the dollar amount indicated below within a 13-month
period in shares of one or more of the eligible Northstar Funds.

/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000

RIGHTS OF ACCUMULATION
If this account qualified for a Reduced Sales Charge under the terms of the current Prospectus, please list account numbers:

/ / $100,000 / / $250,000 / / $500,000 / / $1,000,000

- -
---- -------- ---- ---------
---------------------------------------------------------------------------------------------------------------------------------
5 AGREEMENTS AND SIGNATURES
---------------------------------------------------------------------------------------------------------------------------------

I/We am/are of legal age and wish to establish an account in accordance with the terms and conditions of the current applicable
Prospectus, a copy of which has been received and read. I/We understand and agree that neither First Data nor the Northstar Funds
shall be held liable for any loss, liability, cost or expense for acting in accordance with this application, or any section
thereof. I/We acknowledge that the account(s) established by this application will be subject to the telephone exchange and
redemption privileges described in this current prospectus, unless indicated otherwise, with the understanding that the Fund,
Northstar and the Transfer Agent will not be able to verify the authenticity of any telephone or redemption order received from
persons other than registered representatives of Northstar Distributors, Inc. and that they will not be liable for following
telephone exchange or redemption instructions that prove to be fraudulent. Shareholders would bear the loss resulting from
instructions entered by an unauthorized third party.

Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification number and (2)
that I am not* subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue
Service has notified me that I am no longer subject to backup withholding.

*If you are subject to backup withholding, please cross through the word "not" in part (2) above.

---------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL (OR CUSTODIAN) DATE

---------------------------------------------------------------------------------------------------------------------------------
CO-OWNER (OR CORPORATE OFFICER, PARTNER OR TRUSTEE) DATE

---------------------------------------------------------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE

---------------------------------------------------------------------------------------------------------------------------------
6 FOR DEALER USE ONLY
---------------------------------------------------------------------------------------------------------------------------------
We guarantee the signature(s) and legal capacity of the applicant(s) referred to herein, and in the case of a withdrawal program
we affirm that, in our opinion, the designated withdrawal is reasonable in view of the circumstances involved.

---------------------------------------------------------------------------------------------------------------------------------
DEALER NAME (PLEASE PRINT CAREFULLY) DEALER NO.

---------------------------------------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE (MUST BE PROVIDED FOR WITHDRAWAL PROGRAMS, TELEPHONE REDEMPTIONS AND TELEPHONE EXCHANGES)

---------------------------------------------------------------------------------------------------------------------------------
BRANCH NUMBER BRANCH ADDRESS

---------------------------------------------------------------------------------------------------------------------------------

REP NAME (PLEASE PRINT CAREFULLY) FIRST AND LAST NAME PHONE NUMBER (IMPORTANT) REP NUMBER

( )
----------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------
Upon completion of the application, please
return with a check made payable to:
NORTHSTAR FUNDS,
c/o FIRST DATA, Box 8758, Providence, RI 02940

SPECIAL ACCOUNT OPTION
---------------------------------------------------------------------------------------------------------------------------------
7 AUTOMATIC INVESTMENT PLAN
---------------------------------------------------------------------------------------------------------------------------------

Attach a VOIDED CHECK from your bank account and a check for an initial deposit to establish this plan (minimum $25). Please
complete the following information to invest automatically the dollar amount stated below on approximately the 15th / /, 30th
/ / or the 15th and 30th / /, of the month.

The applicant authorizes the Northstar Funds to draw monthly drafts on your bank account number _________ and use the proceeds
($25 minimum) therefrom to purchase shares of Northstar ___________ _____________
FUND NAME $ AMOUNT

Registered in the name(s) of __________________________________________

RESTRICTIONS

Each purchase of shares will be made at the current offering price determined as of the close of business on the day on which
such purchase is made. Automatic investments may be discontinued by either Northstar Funds or the purchaser upon 30 days
written notice to the other.

The Northstar Funds reserves the right to cancel any transaction which was executed in reliance on a draft authorized where the
bank upon which the draft was drawn refused to make payment thereon for any reason.

ATTACH VOID CHECK HERE
---------------------------------------------------------------------------------------------------------------------------------
8 WITHDRAW PROGRAM
---------------------------------------------------------------------------------------------------------------------------------

A Withdrawal Plan is available on Class A shares (non-certificated shares only) provided the Fund being purchased has a value of
$5,000 or more.

Withdrawals with respect to Class B and Class C shares are limited (see the Prospectus) and are conditional upon dividends and
capital gains being automatically reinvested.

1. The amount of each payment shall be ($25 minimum)
--------- -------- --------- --------
FUND NAME $ AMOUNT FUND NAME $ AMOUNT

2. Payments are to be made / / Monthly / / Quarterly / / Semi-Annually / / Annually on the / / 1st or / / 15th of the month

Choose one of the following methods of distribution.

/ / ACH Please have my payments electronically transferred to my bank. I have attached the required voided check and I have
verified that my bank is a member of the Automated Clearing House (ACH).

/ / MAIL Please have my payments mailed. I understand that the payments will be made payable to me and mailed to my account
mailing address unless a special designation is referenced below:

---------------------------------------------------------------------------------------------------------------------------------
NAME (PLEASE PRINT CAREFULLY.)

---------------------------------------------------------------------------------------------------------------------------------
STREET

---------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE YOUR BANK ACCOUNT NUMBER

---------------------------------------------------------------------------------------------------------------------------------

ATTACH VOID CHECK HERE
---------------------------------------------------------------------------------------------------------------------------------
9 TELEPHONE EXCHANGE REDEMPTION AND EXPEDITED TELEPHONE REDEMPTION
---------------------------------------------------------------------------------------------------------------------------------

Signature guarantees are required if: 1. Redemption is over $50,000.
2. Proceeds are to be sent to address other than record.

ALL SHAREHOLDERS AND THEIR DEALER REPRESENTATIVES WILL AUTOMATICALLY RECEIVE TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES,
(NON-CERTIFICATED SHARES ONLY) UNLESS AN ELECTION NOT TO RECEIVE THESE PRIVILEGES IS EXERCISED BELOW.

/ / DO NOT CODE MY / / DO NOT CODE MY
ACCOUNT FOR TELEPHONE ACCOUNT FOR TELEPHONE
EXCHANGE PRIVILEGE. REDEMPTION PRIVILEGE.

/ / PLEASE WIRE REDEMPTION PROCEEDS TO MY BANK. (I UNDERSTAND THE MINIMUM FOR WIRES IS $1,000.) MY VOIDED CHECK IS ATTACHED.

</TABLE>

APPENDIX

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
CORPORATE BOND RATINGS

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally know as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations,
I.E., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

DESCRIPTION OF STANDARD & POOR'S CORPORATION'S ("S&P") CORPORATE DEBT RATINGS

AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB: Debt rated BBB is regarded as having adequate capacity to pay interest
and repay principal. Whereas it normally exhibits protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than for debt in higher-rated categories.

BB, B, CCC, CC, C: Debt rated BB, B, CCC, CC and C is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

CI: The rating CI is reserved for income bonds on which no interest is
being paid.

<PAGE>

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

<PAGE>

[LOGO]
Principal Underwriter
Northstar Distributors, Inc.
Two Pickwick Plaza
Greenwich, CT 06830

Investment Adviser
Northstar Investment Management Corporation
Two Pickwick Plaza
Greenwich, CT 06830

Transfer Agent

First Data Investor Services Group, Inc.
53 State Street
Boston, MA 02109-2873

1-800-595-7827

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.

TABLE OF CONTENTS

PAGE

Expense Information
Financial Highlights
Investment Objectives and Policies of the Funds

Investment Considerations and Risk Factors

Performance Information
How Net Asset Value is Determined
Management of the Funds
How to Purchase Shares
Alternative Sales Arrangements
Investor Services and Account Policies
How to Sell Shares
Distribution Plans
Dividends, Distributions and Taxes
General Information
Appendix A-1

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

DATED NOVEMBER 18, 1996

NORTHSTAR SPECIAL FUND
NORTHSTAR GROWTH + VALUE FUND

NORTHSTAR GROWTH FUND
NORTHSTAR INCOME AND GROWTH FUND

NORTHSTAR BALANCE SHEET OPPORTUNITIES FUND
NORTHSTAR GOVERNMENT SECURITIES FUND

NORTHSTAR STRATEGIC INCOME FUND
NORTHSTAR HIGH YIELD FUND

NORTHSTAR HIGH TOTAL RETURN FUND

Two Pickwick Plaza
Greenwich, Connecticut 06830

(203) 863-6200
(800) 595-7827

This Statement of Additional Information, which is not a prospectus ,
supplements and should be read in conjunction with the current Prospectus of the
Funds dated November 18, 1996, as each may be revised from time to time. To
obtain a copy of the Funds' Prospectus , please contact Northstar Investment
Management Corporation at the address or phone number listed above.

Northstar Investment Management Corporation ("Northstar" or the "Adviser")
serves as the Fund's investment adviser. Northstar has engaged Navellier
Fund Management, Inc. (the "Subadviser") to serve as subadviser to
the Northstar Special Fund and Northstar Growth + Value Fund, subject
to the supervision of Northstar. Wilson/Bennett Capital Management, Inc.
serves as subadviser to Northstar Income and Growth Fund. Northstar
Distributors, Inc. (the "Underwriter") is the underwriter to the Funds.
Northstar Administrators Corporation (the "Administrator") is the Funds'
administrator. The Underwriter and the Administrator are affiliates of
Northstar.

TABLE OF CONTENTS

INVESTMENT RESTRICTIONS....................................................3
INVESTMENT TECHNIQUES......................................................8

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION..........................20

SERVICES OF NORTHSTAR, THE SUBADVISERS
AND THE ADMINISTRATOR................................................23

NET ASSET VALUE...........................................................27

PURCHASES AND REDEMPTIONS................................................ 28

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES........................................31
UNDERWRITER AND DISTRIBUTION SERVICES.....................................36
TRUSTEES AND OFFICERS.....................................................42

ORGANIZATIONAL AND RELATED INFORMATION....................................47
PERFORMANCE INFORMATION...................................................48

FINANCIAL STATEMENTS......................................................53

<PAGE>

INVESTMENT RESTRICTIONS

NORTHSTAR GROWTH + VALUE FUND. The Fund has adopted investment restrictions
numbered 1 through 11 as fundamental policies. These restrictions cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended) of such Fund's outstanding voting
shares. Investment restrictions numbered 12 through 15 are not fundamental
policies and may be changed by vote of a majority of the Trust's Board members
at any time. The Fund may not:

1. Borrow money, issue senior securities, or pledge, mortgage
or hypothecate its assets, except that it may: (a) borrow from banks but
only if, immediately after such borrowing there is asset coverage of
300%, and (b) enter into transactions in options, futures, and options
on futures and other transactions not deemed to involve the issuance of
senior securities;

2. Underwrite the securities of others;

3. Purchase or sell real property, including real estate
limited partnerships (each of these Funds may purchase marketable
securities of companies that deal in real estate or interests therein,
including real estate investment trusts);

4. Deal in commodities or commodity contracts,
except in the manner described in the current Prospectus and SAI of
the Fund;

5. Make loans to other persons (but the Fund may, however, lend
portfolio securities, up to 33% of net assets at the time the loan is
made, to brokers or dealers or other financial institutions not
affiliated with the Fund or Northstar, subject to conditions established
by Northstar (See "Lending Portfolio Securities" in this SAI), and may
purchase or hold participations in loans, in accordance with the
investment objectives and policies of the Fund, as described in the
current Prospectus and SAI of the Fund;

6. Purchase on margin (except that for purposes of
this restriction, the deposit or payment of initial or variation
margin in connection with futures contracts will not be deemed to be
purchases of securities on margin);

7. Sell short, except that these Funds may enter into
short sales against the box;

8. Invest more than 25% of its assets in any one industry
or related group of industries;

9. With respect to 75% of the Fund's assets, purchase
a security (other than U.S. Government obligations) if, as a
result, more than 5% of the value of total assets of the Fund would
be invested in securities of a single issuer;

10. Purchase a security if, as a result, more than 10% of
any class of securities, or more than 10% of the outstanding voting
securities of an issuer, would be held by the Fund;

<PAGE>

11. Borrow money except to the extent permitted under the
1940 Act;

12. Purchase securities of other investment companies, except
in connection with a merger, consolidation or sale of assets, and except
that these Funds may purchase shares of other investment companies,
subject to such restrictions as may be imposed by the 1940 Act and rules
thereunder or by any state in which shares of the Fund are registered;

13. Make an investment for the purpose of exercising
control over management;

14. Invest more than 15% of its net assets in illiquid
securities; or

15. Borrow any amount in excess of 10% of their
respective assets, other than for temporary emergency or
administrative purposes. In addition, assets, the Fund will not make
additional investments when its borrowings exceed 5% of total assets.

NORTHSTAR INCOME AND GROWTH FUND AND NORTHSTAR HIGH TOTAL RETURN FUND.
The Funds have adopted investment restrictions numbered 1 through 11 as
fundamental policies. These restrictions cannot be changed without
approval by the holders of a majority (as defined in the Investment
Company Act of 1940, as amended) of such Fund's outstanding voting
shares. Investment restrictions numbered 12 through 17 are not
fundamental policies and may be changed by vote of a majority of the
Trust's Board members at any time. The Funds may not:

2. Underwrite the securities of others;

4. Deal in commodities or commodity contracts, except
in the manner described in the current Prospectus and SAI of the
Fund;

5. Make loans to other persons (but the Funds may, however,
lend portfolio securities, up to 33% of net assets at the time the loan
is made, to brokers or dealers or other financial institutions not
affiliated with the Funds or Northstar, subject to conditions
established by Northstar (See "Lending Portfolio Securities" in this
SAI), and may purchase or hold participations in loans, in accordance
with the investment objectives and policies of the Fund, as described in
the current Prospectus and SAI of the Fund;

6. Participate in any joint trading accounts;

<PAGE>

7. Purchase on margin (except that for purposes of
this restriction, the deposit or payment of initial or variation
margin in connection with futures contracts will not be deemed to be
purchases of securities on margin);

8. Sell short, except that these Funds may enter into
short sales against the box;

9. Invest more than 25% of its assets in any one industry
or related group of industries;

10. Purchase a security (other than U.S. Government
obligations) if, as a result, more than 5% of the value of total
assets of the Fund would be invested in securities of a single issuer;

11. Purchase a security if, as a result, more than 10% of
any class of securities, or more than 10% of the outstanding voting
securities of an issuer, would be held by the Fund;

12. Invest in a security if, as a result of such investment,
more than 5% of its total assets (taken at market value at the time of
such investment) would be invested in securities of issuers (other than
issuers of federal agency obligations) having a record, together with
predecessors or unconditional guarantors, of less than three years of
continuous operation;

13. Purchase securities of other investment companies, except
in connection with a merger, consolidation or sale of assets, and except
that these Funds may purchase shares of other investment companies,
subject to such restrictions as may be imposed by the 1940 Act and rules
thereunder or by any state in which shares of the Fund are registered;

14. Purchase or retain securities of any issuer if 5% of
the securities of such issuer are owned by those officers and directors
or trustees of the Fund or of Northstar who each own beneficially more
than 1/2 of 1% of its securities;

15. Make an investment for the purpose of exercising
control over management;

16. Invest more than 15% of its net assets (determined at the
time of investment) in illiquid securities, including securities subject
to legal or contractual restrictions on resale (which may include
private placements and those 144A securities for which the Trustees,
pursuant to procedures adopted by the Fund, have not determined there is
a liquid secondary market), repurchase agreements maturing in more than
seven days, options traded over the counter that a Fund has purchased,
securities being used to cover options a Fund has written, securities
for which market quotations are not readily available, or other
securities that, legally or in the Adviser's or Trustees' opinion, may
be deemed illiquid; or

17. Invest in interests in oil, gas or other mineral
exploration development programs (including oil, gas or other mineral
leases).

As a fundamental policy, these Funds may borrow money from banks to the
extent permitted under the 1940 Act. As an operating (non-fundamental)
policy, these Funds do not intend to

<PAGE>

borrow any amount in excess of 10% of their respective assets, and would
do so only for temporary emergency or administrative purposes. In
addition, to avoid the potential leveraging of assets, neither of these
Funds will make additional investments when its borrowings, including
those investment techniques which are regarded as a form of borrowing,
are in excess of 5% of total assets. If either of these Funds should
determine to expand its ability to borrow beyond the current operating
policy, the Fund's Prospectus would be amended and shareholders would be
notified.

NORTHSTAR SPECIAL, GROWTH, BALANCE SHEET OPPORTUNITIES, GOVERNMENT
SECURITIES, STRATEGIC INCOME AND HIGH YIELD FUNDS. The Funds have
adopted investment restrictions numbered 1 through 12 as fundamental
policies. These restrictions cannot be changed without approval by the
holders of a majority (as defined in the Investment Company Act of 1940,
as amended) of such Fund's outstanding voting shares. Investment
restrictions numbered 13 through 21 are not fundamental policies and may
be changed by vote of a majority of the Trust's Board members at any
time. Each Fund may not:

1. Borrow money, except from a bank and as a temporary
measure for extraordinary or emergency purposes, provided the Fund
maintains asset coverage of 300% for all borrowings;

2. Purchase securities of any one issuer (except Government
securities) if, as a result, more than 5% of the Fund's total assets
would be invested in that issuer, or the Fund would own or hold more
than 10% of the outstanding voting securities of the issuer; PROVIDED,
HOWEVER, that up to 25% of the Fund's total assets may be invested
without regard to these limitations;

3. Underwrite the securities of other issuers, except to
the extent that in connection with the disposition of portfolio
securities, the Fund may be deemed to be an underwriter;

4. Concentrate its assets in the securities of issuers all
of which conduct their principal business activities in the same
industry (this restriction does not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities);

5. Make any investment in real estate, commodities or
commodities contracts, except that these Funds may: (a) purchase or sell
readily marketable securities that are secured by interest in real
estate or issued by companies that deal in real estate, including real
estate investment and mortgage investment trusts; and (b) engage in
financial futures contracts and related options, as described herein and
in the Fund's Prospectus;

6. Make loans, except that these Funds may: (a) invest in
repurchase agreements, and (b) loan its portfolio securities in amounts
up to one-third of the market or other fair value of its total assets;

7. Issue senior securities, except as appropriate to evidence
indebtedness that it is permitted to incur, provided that the deposit or
payment by the Fund of initial or maintenance

<PAGE>

margin in connection with futures contracts and related options is not
considered the issuance of senior securities;

8. Borrow money in excess of 5% of its total assets (taken
at market value);

9. Pledge, mortgage or hypothecate in excess of 5% of its total
assets (the deposit or payment by a Fund of initial or maintenance
margin in connection with futures contracts and related options is not
considered a pledge or hypothecation of assets);

10. Purchase more than 10% of the voting securities of any
one issuer, except U.S. Government Securities;

11. Invest more than 15% of its net assets in illiquid
securities, including repurchase agreements maturing in more than 7
days, that cannot be disposed of within the normal course of business at
approximately the amount at which the Fund has valued the securities,
excluding restricted securities that have been determined by the
Trustees of the Fund (or the persons designated by them to make such
determinations) to be readily marketable;

12. Purchase securities of any issuer with a record of less
than 3 years of continuous operations, including predecessors, except
U.S. Government Securities and obligations issued or guaranteed by any
foreign government or its agencies or instrumentalities, if such
purchase would cause the investments of a Fund in all such issuers to
exceed 5% of the total assets of the Fund taken at market value;

13. Purchase securities on margin, except these Funds may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities (the deposit or payment by a Fund of
initial or maintenance margin in connection with futures contracts or
related options is not considered the purchase of a security on margin);

14. Write put and call options, unless the options are
covered and the Fund invests through premium payments no more than 5% of
its total assets in options transactions, other than options on futures
contracts;

15. Purchase and sell futures contracts and options on futures
contracts, unless the sum of margin deposits on all futures contracts
held by the Fund, and premiums paid on related options held by the Fund,
does not exceed more than 5% of the Fund's total assets, unless the
transaction meets certain "bona fide hedging" criteria (in the case of
an option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in computing the 5%);

16. Invest in securities of any issuer if any officer or
trustee of the Fund or any officer or director of Northstar owns more
than 1/2 of 1% of the outstanding securities of the issuer, and such
officers, directors and trustees own in the aggregate more than 5% of
the securities of such issuer;

<PAGE>

17. Invest in interests in oil, gas or other mineral
exploration or development programs (although it may invest in issuers
that own or invest in such interests);

18. Purchase securities of any investment company, except by
purchase in the open market where no commission or profit to a sponsor
or dealer results from such purchase, or except when such purchase,
though not made in the open market, is part of a plan of merger,
consolidation, reorganization or acquisition of assets;

19. Purchase more than 3% of the outstanding voting securities
of another investment company, invest more than 5% of its total assets
in another investment company, or invest more than 10% of its total
assets in other investment companies;

20. Purchase warrants if, as a result, warrants taken at the
lower of cost or market value would represent more than 5% of the value
of the Fund's net assets or if warrants that are not listed on the New
York or American Stock Exchanges or on an exchange with comparable
listing requirements, taken at the lower of cost or market value, would
represent more than 2% of the value of the Fund's net assets (for this
purpose, warrants attached to securities will be deemed to have no
value); or

21. Make short sales, unless, by virtue of its ownership of
other securities, the Fund has the right to obtain securities equivalent
in kind and amount to the securities sold and, if the right is
conditional, the sale is made upon the same conditions, except in
connection with arbitrage transactions. The Strategic Income Fund,
additionally, may not invest in interests of real estate limited
partnerships.

In addition to the restrictions described above, each of these Funds
may, from time to time, agree to additional investment restrictions for
purposes of compliance with the securities laws of those state and
foreign jurisdictions where that Fund intends to offer or sell its
shares.

INVESTMENT TECHNIQUES

DERIVATIVE INSTRUMENTS. The Funds may invest in Derivative Instruments
(as defined in the Fund's Prospectus) 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.

<PAGE>

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 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.

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.

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

<PAGE>

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 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 may purchase and sell interest rate futures contracts. An
interest rate future obligates the Fund to purchase or sell an amount of
a specific debt security at a future date at a specific price.

The Fund may purchase and sell currency futures. A foreign currency
future obligates the Fund to purchase or sell an amount of a specific
currency at a future date at a specific price.

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.

<PAGE>

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.

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.

<PAGE>

SHORT SALES. A 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.

PRIVATELY ISSUED COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS, INTEREST
OBLIGATIONS AND PRINCIPAL OBLIGATIONS. Each of High Total Return Fund
and Income and Growth Fund may invest up to 5% of its net assets in
Privately Issued Collateralized Mortgage-Backed Obligations ("CMOs"),
Interest Obligations ("IOs") and Principal Obligations ("POs") when
Northstar believes that such investments are consistent with the Fund's
investment objective. Collateralized mortgage obligations or "CMOs" are
debt obligations collateralized by mortgage loans or mortgage
pass-through securities. Typically, privately issued CMOs are
collateralized by Ginnie Mae, Fannie Mae or Freddie Mac Certificates,
but also may be collateralized by whole loans or private pass-throughs
(such collateral collectively hereinafter referred to as "Mortgage
Assets"). Privately issued CMOs are per se illiquid. Multi-class
pass-through securities are equity interest in a trust composed of
Mortgage Assets. Unless the context indicates otherwise, all references
herein to CMOs include multi-class pass-thorough securities. Payments of
principal of and interest on the Mortgage Assets, and any reinvestment
income thereon, are the source of funds used to pay debt service on the
CMOs or make scheduled distribution on the multi-class pass-through
securities.

On a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of CMOs, often referred to as a "tranche", is issued
at a specific fixed or floating coupon rate and has a stated maturity or
final distribution date. Principal prepayments on the Mortgage Assets
may cause the CMOs to be retired substantially earlier than their stated
maturities or final distribution dates. The principal of and interest on
the Mortgage Assets may be allocated among the several classes of a
series of a CMO in innumerable ways. The Funds may also invest in, among
others, parallel pay CMOs and Planned Amortization Class CMOs ("PAC
Bonds"). Parallel pay CMOs are structured to provide payments of
principal on each payment date to more than one class. These
simultaneous payments are taken into account in calculating the stated
maturity date or final distribution date of each class, which, as with
other CMO structures, must be retired by its stated maturity date or
final distribution date but may be retired earlier. PAC Bonds generally
call for payments of a specified amount of principal on each payment
date.

Stripped mortgage-backed securities ("SMBS") are derivative multi-class
mortgage securities. SMBS may be issued by agencies or instrumentalities
of the U.S. government, or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage banks,
commercial banks, investment banks and special purpose subsidiaries of
the foregoing.

SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a
pool of Mortgage Assets. A common type of SMBS

<PAGE>

will have at least one class receiving only a small portion of the
interest and a larger portion of the principal from the Mortgage Assets,
while the other classes will receive primarily interest and only a small
portion of the principal. In the most extreme case, one class will
receive all of the interest (the interest-only or "IO" class), while the
other class will receive all of the principal (the principal-only or
"PO" class). The yield to maturity on an IO class is extremely sensitive
to the rate of principal payments (including prepayments) on the related
underlying Mortgage Assets, and a rapid rate of principal payments may
have a material adverse effect on such security's yield to maturity. If
the underlying Mortgage Assets experience greater than anticipated
prepayments of principal, a Fund may fail to recoup fully its initial
investment in these securities. The determination of whether a
particular government-issued IO or PO backed by fixed-rate mortgage is
liquid is made by Northstar under guidelines and standards established
by the Board of Trustees. Such a security may be deemed liquid if it can
be disposed of promptly in the ordinary course of business at a value
reasonably close to that used in the calculation of net asset value per
share.

INDEX WARRANTS. The Strategic Income Fund may purchase put warrants and
call warrants whose values vary depending on the change in the value of
one or more specified securities indices ("index warrants"). Index
warrants are generally issued by banks or other financial institutions
and give the holder the right, at any time during the term of the
warrant, to receive upon exercise of the warrant a cash payment from the
issuer, based on the value of the underlying index at the time of
exercise. In general, if the value of the underlying index rises above
the exercise price of the index warrant, the holder of a call warrant
will be entitled to receive a cash payment from the issuer upon
exercise, based on the difference between the value of the index and the
exercise price of the warrant; if the value of the underlying index
falls, the holder of a put warrant will be entitled to receive a cash
payment from the issuer upon exercise, based on the difference between
the exercise price of the warrant and the value of the index. The holder
of a warrant would not be entitled to any payments from the issuer at
any time when, in the case of a call warrant, the exercise price is
greater than the value of the underlying index, or, in the case of a put
warrant, the exercise price is less than the value of the underlying
index. If the Strategic Income Fund were not to exercise an index
warrant prior to its expiration, then the Fund would lose the amount of
the purchase price paid by it for the warrant. The Strategic Income Fund
will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of the Fund's use of index
warrants are generally similar to those relating to its use of index
options. Unlike most index options, however, index warrants are issued
in limited amounts and are not obligations of a regulated clearing
agency, but are backed only by the credit of the bank or other
institution that issues the warrant. Also, index warrants generally have
longer terms than index options. Although the Strategic Income Fund will
normally invest only in exchange-listed warrants, index warrants are not
likely to be as liquid as certain index options backed by a recognized
clearing agency. In addition, the terms of index warrants may limit the
Fund's ability to exercise the warrants at such time, or in such
quantities, as the Fund would otherwise wish to do.

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

<PAGE>

by the relevant Fund's Trustees in reviewing the creditworthiness of
parties to repurchase agreements with such Fund. In addition, no more
than an aggregate of 15% of a 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, a 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.

Pursuant to an Exemptive Order under Section 17(d) and Rule 17d-1
obtained by the Funds, excluding the Strategic Income Fund and the
Northstar Trust, on March 5, 1991, such Funds may deposit uninvested
cash balances into a single joint account to be used to enter into
repurchase agreements.

As an alternative to using repurchase agreements, a Fund may, from time
to time, invest up to 5% of its assets in money market investment
companies sponsored by a third party for short-term liquidity purposes.
Such investments are subject to the non-fundamental investment
limitations described herein.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLL AGREEMENTS. The Funds may
enter into reverse repurchase agreements and dollar roll agreements.
Under a reverse repurchase agreement or a dollar roll agreement, a Fund
sells securities and agrees to repurchase them, or substantially similar
securities in the case of a dollar roll agreement, at a mutually agreed
upon date and price. At the time the Fund enters into a reverse
repurchase or dollar roll agreement, it will establish and maintain a
segregated account with its custodian, containing cash, U.S. Government
Securities, or other liquid assets from its portfolio, having a value
not less than the repurchase price (including accrued interest). The
Funds do not account for dollar rolls as a borrowing.

These agreements may involve the risk that the market value of the
securities to be repurchased by a Fund may decline below the price at
which the Fund is obligated to repurchase. Also, in the event the buyer
of securities under a reverse repurchase agreement or a dollar roll
agreement files for bankruptcy or becomes insolvent, such buyer or its
trustee or receiver may receive an extension of time to determine
whether to enforce the Fund's obligation to repurchase the securities,
and the Fund's use of the proceeds of the reverse repurchase agreement
or the dollar roll agreement may effectively be restricted pending such
a decision.

LENDING PORTFOLIO SECURITIES. A Fund may lend portfolio securities to
broker-dealers and other financial institutions in an amount up to
one-third 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. A 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

<PAGE>

securities will only be made to firms considered by Northstar to be
creditworthy under guidelines adopted by the Trustees.

FIRM COMMITMENTS AND WHEN-ISSUED SECURITIES. Each Fund may enter into
firm commitment agreements to purchase securities at an agreed-upon
price on a specified future date. An amount of cash or short-term U.S.
Government Securities equal to the Fund's commitment will be deposited
in a segregated account at the Fund's custodian bank to secure the
Fund's obligation. Although a Fund will generally enter into firm
commitments to purchase securities with the intention of actually
acquiring the securities for its portfolio (or for delivery pursuant to
options contracts it has entered into), the Fund may dispose of a
security prior to settlement if Northstar deems it advisable to do so.
A Fund entering into the forward commitment may realize short-term gains
or losses in connection with such sales.

A Fund may enter into To Be Announced ("TBA") sale commitments wherein
the unit price and the estimated principal amount are established upon
entering into the contract, with the actual principal amount being
within a specified range of the estimate. A Fund will enter into TBA
sale commitments to hedge its portfolio positions or to sell
mortgage-backed securities it owns under delayed delivery arrangements.
Proceeds of TBA sale commitments are not received until the contractual
settlement date. During the time a TBA sale commitment is outstanding,
the Fund will maintain, in a segregated account, cash or high-grade debt
obligations in an amount sufficient to meet the purchase price.
Unsettled TBA sale commitments are valued at current market value of the
underlying securities. If the TBA sale commitment is closed through the
acquisition of an offsetting purchase commitment, the Fund realizes a
gain or loss on the commitment without regard to any unrealized gain or
loss on the underlying security. If the Fund delivers securities under
the commitment, the Fund realizes a gain or loss from the sale of the
securities, based upon the unit price established at the date the
commitment was entered into.

A Fund may also 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 a Fund will purchase
such securities with the purpose of actually acquiring them, unless a
sale appears desirable for investment reasons.

FLOATING OR VARIABLE RATE INSTRUMENTS. The Funds may purchase floating
or variable rate bonds, which normally provide that the holder can
demand payment of the obligation on short notice at par with accrued
interest. Such bonds are frequently secured by letters of credit or
other credit support arrangements provided by banks. Floating or
variable rate instruments provide for adjustments in the interest rate
at specified intervals (weekly, monthly, semiannually, etc.). A Fund
would anticipate using these bonds as cash equivalents, pending longer
term investment of

<PAGE>

its funds. Other longer term fixed-rate bonds, with a right of the
holder to request redemption at certain times (often annually, after the
lapse of an intermediate term), may also be purchased by a Fund. These
bonds are more defensive than conventional long-term bonds (protecting
to some degree against a rise in interest rates), while providing
greater opportunity than comparable intermediate term bonds since the
Fund may retain the bond if interest rates decline. By acquiring these
kinds of bonds, a Fund obtains the contractual right to require the
issuer of the security, or some other person (other than a broker or
dealer), to purchase the security at an agreed upon price, which right
is contained in the obligation itself rather than in a separate
agreement with the seller or some other person.

ZERO COUPON SECURITIES. Zero coupon securities are fixed income
securities that have been stripped of their unmatured interest coupons.
Zero coupon securities are sold at a (usually substantial) discount and
redeemed at face value at their maturity date without interim cash
payments of interest or principal. The amount of this discount is
accredited over the life of the security, and the accretion constitutes
the income earned on the security for both accounting and tax purposes.
Because of these features, the market prices of zero coupon securities
are generally more volatile than the market prices of securities that
have a similar maturity but that pay interest periodically. Zero coupon
securities are likely to respond to a greater degree to interest rate
changes than are non-zero coupon securities with similar maturity and
credit qualities. Each Fund may invest a portion of its total assets in
"zero coupon" Treasury securities, which consist of Treasury bills or
stripped interest or principal components of U.S. Treasury bonds or
notes.

Zero coupon Treasury bonds or notes consist of stripped interest or
principal components held in STRIPS form issued through the U.S.
Treasury's STRIPS program, which permits the beneficial ownership of the
component to be recorded directly in the Treasury book-entry system. The
Funds may also purchase custodial receipts evidencing beneficial
ownership of direct interests in component parts of U.S. Treasury bonds
or notes held by a bank in a custodian or trust account.

ADDITIONAL INFORMATION ON GNMAS. The Funds may invest in U.S. Government
Securities, which are obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities. A substantial portion of
the assets of the Government Securities Fund have, at various times,
been invested in obligations of the Government National Mortgage
Association (popularly called GNMAs or Ginnie Maes). All of the other
Funds may also invest in GNMAs from time to time.

GNMAs are mortgage backed securities representing part ownership of a
pool of mortgage loans, in which the timely payment of principal and
interest is guaranteed by the full faith and credit of the U.S.
Government. GNMA may borrow U.S. Treasury funds to the extent needed to
make payments under the guarantee. The Funds purchase "modified
pass-through" type GNMA Certificates for which principal and interest
are guaranteed, rather than the "straight pass through" Certificates for
which such guarantee is not available. The Funds also purchase "variable
rate" GNMA Certificates and may purchase other types that may be used
with GNMA's guarantee.

<PAGE>

When mortgages in the pool underlying a GNMA Certificate are prepaid by
mortgagors or when foreclosure occurs, such principal payments are
passed through to the Certificate holders (such as a Fund). Accordingly,
the life of the GNMA Certificate is likely to be substantially shorter
than the stated maturity of the mortgages in the underlying pool, which
will have maturities of up to 30 years. Because of such variation in
prepayment rights, it is not possible to accurately predict the life of
a particular GNMA Certificate.

Payments to holders of GNMA Certificates consist of the monthly
distributions of interest and principal, less the GNMA and issuer's
fees. The portion of the monthly payment that represents a return of
principal may be reinvested by a Fund holding the GNMA in then-available
GNMA obligations, which may bear interest at a rate higher or lower than
the obligation from which the payment was received, or in a differing
security. The actual yield to be earned by the holder of a GNMA
Certificate is calculated by dividing such payments by the purchase
price paid for the GNMA Certificate (which may be at a premium or a
discount from the face value of the Certificate). Unpredictable
prepayments of principal, however, can greatly change realized yields.
In a period of declining interest rates it is more likely that mortgages
contained in GNMA pools will be prepaid, thus reducing the effective
yield. Moreover, any premium paid on the purchase of a GNMA Certificate
will be lost if the obligation is prepaid. In periods of falling
interest rates, this potential for prepayment may reduce the general
upward price increase of GNMA Certificates that might otherwise occur.
As with other debt instruments, the price of GNMA Certificates is likely
to decrease in times of rising interest rates. Price changes of the GNMA
Certificates held by a Fund have a direct impact on the net asset value
per share of the Fund.

When interest rates rise, the value of a GNMA Certificate will generally
decline. Conversely, when rates fall, the GNMA Certificate value may
rise, although not as much as other debt issues, due to the prepayment
feature. As a result, the price per share the shareholder receives on
redemption may be more or less than the price paid for the shares. The
dividends per share paid by the Government Securities Fund may also
vary.

ADDITIONAL INFORMATION ON FOREIGN SECURITIES. Each Fund, except
Government Securities Fund, may invest in securities of foreign issuers.
Each of these Funds other than Strategic Income, High Yield, and High
Total Return may invest up to 20% of its net assets in foreign
securities, of which 10% of its net assets may be invested in foreign
securities that are not listed on a U.S. securities exchange. Strategic
Income may invest up to 60% of its assets in securities of foreign
issuers, High Total Return may invest up to 50% and High Yield up to
35% of its total assets. Eurodollar certificates of deposit are excluded
for purposes of this limitation for Strategic Income.

ADDITIONAL INFORMATION ON HIGH YIELD SECURITIES. Balance Sheet
Opportunities Fund, Strategic Income Fund, High Yield Fund and High
Total Return Fund each may invest in lower-rated fixed income
securities to the extent described in the Prospectus. The lower ratings
of certain securities held by these Funds reflect a greater possibility
that adverse changes in the financial condition of the issuer or
economic conditions in general, or both, or an unanticipated rise in
interest rates, may impair the ability of the issuer to make payments of
interest and

<PAGE>

principal. The inability (or perceived inability) of issuers to make
timely payment of interest and principal would likely make the values of
securities held by these Funds more volatile and could limit a Fund's
ability to sell its securities at prices approximating the values the
Fund had placed on such securities. In the absence of a liquid trading
market for the securities held by it, a Fund may be unable at times to
establish the fair value of such securities. The rating assigned to a
security by Moody's Investors Service, Inc. or S & P (or by any other
nationally recognized securities rating organization) does not reflect
an assessment of the volatility of the security's market value or the
liquidity of an investment in the security. See the Appendix to the
Prospectus for a description of security ratings.

Like those of other fixed income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. Thus, a
decrease in interest rates will generally result in an increase in the
value of a Fund's assets. Conversely, during periods of rising interest
rates, the value of a Fund's assets will generally decline. In addition,
the values of such securities are also affected by changes in general
economic conditions and business conditions affecting the specific
industries of their issuers. Changes by recognized rating services in
their ratings of any fixed income security and in the ability of an
issuer to make payments of interest and principal may also affect the
value of these investments. Changes in the value of portfolio securities
generally will not affect cash income derived from such securities, but
will effect a Fund's net asset value. A Fund will not necessarily
dispose of a security when its rating is reduced below its rating at the
time of purchase, although Northstar will monitor the investment to
determine whether its retention will assist in meeting a Fund's
investment objective.

Certain securities held by a Fund may permit the issuer at its option to
call, or redeem, its securities. If an issuer were to redeem securities
held by a Fund during a time of declining interest rates, the Fund may
not be able to reinvest the proceeds in securities providing the same
investment return as the securities redeemed.

LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Fund may invest in loan
participations and loan assignments. A Fund's investment in loan
participations typically will result in the Fund having a contractual
relationship only with the Lender and not with the borrower. The Fund
will have the right to receive payments of principal, interest and any
fees to which it is entitled only from the Lender selling the
Participations and only upon receipt by the Lender of the payments from
the borrower. In connection with purchasing Participations, the Fund
generally will have no right to enforce compliance by the borrower with
the terms of the loan agreement relating to the Loan, nor any right of
set-off against the borrower, and the Fund may not directly benefit from
any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Fund may be subject to the credit risk
of both the borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation,
the Fund may be treated as a general creditor of the Lender and may not
benefit from any set-off between the Lender and the borrower.

When a Fund purchases a loan assignment from Lenders, it will acquire
direct rights against the borrowers on the Loan. Because Assignments are
arranged through private negotiations between potential assignees and
potential assignors, however, the rights and obligations acquired by the

<PAGE>

Fund as the purchaser of an Assignment may differ from, and be more
limited than, those held by the assigning Lender. Because there is no
liquid market for such securities, the Funds anticipate that such
securities could be sold only to a limited number of institutional
investors. The lack of a liquid secondary market may have an adverse
impact on the value of such securities and a Fund's ability to dispose
of particular assignments or participations when necessary to meet
redemptions of Fund shares, to meet the Fund's liquidity needs or when
necessary in response to a specific economic event, such as
deterioration in the creditworthiness of the borrower. The lack of a
liquid secondary market for assignments and participations also may make
it more difficult for a Fund to value these securities for purposes of
calculating its net asset value.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

Northstar, and Subadviser in the case of Special Fund and Growth +
Value Fund, places orders for the purchase and sale of the Funds'
securities, supervises their execution and negotiates brokerage
commissions on behalf of each Fund. For purposes of the remainder of
this section, "Portfolio Transactions and Brokerage Allocation,"
discussion of Northstar includes the Subadviser, but only with respect
to Special Fund and Growth + Value Fund. It is the practice of Northstar
to seek the best prices and best execution of orders and to negotiate
brokerage commissions that in the Adviser's opinion, are reasonable in
relation to the value of the brokerage services provided by the
executing 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 Northstar, the rate is
deemed by Northstar 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 a 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 Northstar after the
transaction has been consummated. If Northstar 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. Northstar
believes that each Fund benefits with a securities industry comprised of
many and diverse firms and that the long-term interest of shareholders
of the Funds is best served by its brokerage policies that include
paying a fair commission, rather than seeking to exploit its leverage to
force the lowest possible commission rate. Over-the-counter purchases
and sales are transacted directly with principal market-makers, except
in those circumstances where, in the opinion of Northstar, 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

<PAGE>

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, the outside
research provides Northstar with a diverse perspective on financial
markets. Research and investment information is provided by these and
other brokers at no cost to Northstar and is available for the benefit
of other accounts advised by Northstar 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 Northstar, it does not reduce the Adviser's expenses
by a determinable amount. The extent to which Northstar makes use of
statistical, research and other services furnished by brokers is
considered by Northstar in the allocation of brokerage business, but
there is no formula by which such business is allocated. Northstar does
so in accordance with its judgment of the best interests of the Funds
and their 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 securities at a net price. Each
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
each Fund to obtain the best results, while 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 Northstar generally seeks
reasonably competitive spreads or commissions, the Funds will not
necessarily pay the lowest spread or commission available.

Each Fund may, under circumstances in which two or more dealers are in
a position to offer comparable results, give preference to a dealer that
has provided statistical or other research services to the Funds. By
allocating transactions in this manner, Northstar is able to supplement
its research and analysis with the views and information of other
securities firms. During the fiscal years ended October 31, 1995 and
December 31, 1995, respectively, each of the Funds listed below paid the
total brokerage commissions indicated below, including, in the case of
the Special, Growth, Balance Sheet Opportunities, Government
Securities, Strategic Income, and High Yield Funds, commissions to
Advest, Inc. ("Advest"), an affiliate of the Funds' former investment
adviser.

<PAGE>

BROKERAGE COMMISSIONS PAID DURING MOST RECENT
FISCAL YEARS

October 31, 1995 1994
---------------- ----

Income and Growth Fund $249,474 $136,000

High Total Return Fund $0 $3,021

December 31, 1995 1994
----------------- ----

Special Fund $ 87,375 $ 47,281
Growth Fund $241,864 $151,132
Balance Sheet Opportunities Fund $ 88,151 $ 97,750
Government Securities Fund $ 0 $ 0
Strategic Income Fund $ 552 $ 0
High Yield Fund $ 12,763 $ 13,184

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. Each
Fund cannot accurately predict its portfolio turnover rate, but
Northstar anticipates that each Fund's rate will not exceed 100% under
normal market conditions. A 100% annual turnover rate would occur, for
example, if all the securities in the portfolio were replaced once in a
period of one year. A Fund's portfolio turnover rate may be higher than
that described above if 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 that would be
taxable to shareholders. 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 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.

<PAGE>

SERVICES OF NORTHSTAR, THE SUBADVISERS AND THE ADMINISTRATOR

Pursuant to an Investment Advisory Agreement with each Fund, Northstar
Investment Management Corporation acts as the investment adviser to each
Fund. In this capacity, Northstar, subject to the authority of the
Trustees of the Funds, and subject to delegation of certain
responsibilities to Navellier Fund Management, Inc. as the subadviser
for the Special Fund and the Growth + Value Fund and Wilson/Bennett
Capital Management, Inc. as the subadviser for the Income and Growth
Fund, is responsible for furnishing continuous investment supervision to
the Funds and is responsible for the management of each Fund's
portfolio.

Northstar is an indirect, majority-owned subsidiary of ReliaStar
Financial Corp. ("ReliaStar"). Combined minority interests in Northstar
held by members of senior management of ReliaStar currently equal 20%.
ReliaStar is a publicly traded holding company whose subsidiaries
specialize in the life insurance business. Through ReliaStar Life
Insurance Company ("ReliaStar Life") and other subsidiaries, ReliaStar
issues and distributes individual life insurance and annuities, group
life and health insurance and life and health reinsurance, and provides
related investment management services. The address of Northstar is Two
Pickwick Plaza, Greenwich, Connecticut 06830. The address of ReliaStar
is 20 Washington Avenue South, Minneapolis, Minnesota 55401.

Northstar charges a fee under each advisory agreement to Government
Securities Fund, High Yield Fund, Balance Sheet Opportunities Fund,
Strategic Income Fund, Growth Fund, Special Fund and Growth + Value
Fund at an annual rate, after voluntary waivers or expense
reimbursements, of 0.45%, 0.45%, 0.65%, 0.65%, 0.75%, 0.75% and 1.00%
of such Fund's average daily net assets, respectively. This fee is
accrued daily and payable monthly.

Northstar charges a fee to the Income and Growth Fund and High Total
Return Fund at the annual rate of 0.75% on the first $250,000,000 of
aggregate average daily net assets of each Fund, 0.70% on the next
$250,000,000 of such assets, 0.65% on the next $250,000,000 of such
assets; 0.60% on the next $250,000,000 of such assets, and 0.55% on the
remaining aggregate daily net assets of each Fund in excess of $1
billion.

Northstar has agreed that if, in any fiscal year, the aggregate
expenses of a Fund, exclusive of taxes, distribution fees, brokerage,
interest and (with the prior consent of any necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed the most restrictive expense limitations applicable to the Fund
under state securities laws or published regulations thereunder,
Northstar will refund on a proportionate basis to the Fund whose
expenses exceeded such limitation the excess over such amount up to the
total fee received by Northstar. Currently, the most restrictive of
such limitations would require Northstar to reimburse such a Fund to
the extent that in any fiscal year such aggregate expenses exceed 2.5%
of the first $30,000,000 of the average net assets, 2.0% of the next
$70,000,000 of the average net assets and 1.5% of any amount of the
average net assets in excess of $100,000,000.

<PAGE>

The Investment Advisory Agreement for the Income and Growth Fund and
High Total Return Fund was originally approved by the Trustees of the
Northstar Trust on October 23, 1993, and by the sole Shareholder of the
Northstar Income and Growth Fund, and High Total Return Fund on November
8, 1993. The Investment Advisory Agreement continued in effect for a
period of two years and was renewed by the Trustees for one year on
October 31, 1995. It 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.

The Investment Advisory Agreement for the Growth + Value Fund was
approved by the Trustees on July 31, 1996. The Investment Advisory
Agreement will continue in effect for a period of two years and annually
thereafter if specifically approved annually by (a) the Trustees, acting
separately on behalf of the Fund, including a majority of the
Disinterested Trustees, or (b) a majority of the outstanding voting
securities of each class of the Fund as defined in the 1940 Act.

Each Investment Advisory Agreement for the remaining Funds was approved
by the Trustees of the affected Fund on March 1, 1995 and by the
shareholders of such Fund on June 2, 1995. Each such Investment Advisory
Agreement will continue in effect until June 2, 1997, and thereafter,
will continue in effect from year to year if specifically approved
annually by (a) the Trustees, acting separately on behalf of the
particular Fund, including a majority of the Disinterested Trustees, or
(b) a majority of the outstanding voting securities of each class of
such Fund as defined in the 1940 Act.

A Fund's Investment Advisory Agreement may be terminated as to any
class, without penalty and at any time, by a similar vote upon not more
than 60 days' nor less than 30 days' written notice by Northstar, the
Trustees, or a majority of the outstanding voting securities of such
class of such Fund as defined in the 1940 Act. Such agreement will
automatically terminate in the event of its assignment, as defined in
Section 2(a)(4) of the 1940 Act.

Pursuant to separate Subadvisory Agreements between Northstar and
Navellier Fund Management, Inc., dated February 1, 1996, and July 31,
1996, Navellier acts as subadviser to Special Fund and Growth + Value
Fund, respectively. In this capacity, Navellier Fund Management, Inc.,
subject to the supervision and control of Northstar and the Trustees of
such Funds, will manage the Funds' portfolio investments, consistently
with their investment objective, and will execute any of the Funds'
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 the Subadviser at the annual rate of 0.48% and 0.64%
of the average daily net assets of Special Fund and Growth + Value Fund,
respectively. The Subadviser is wholly-owned and controlled by its sole
stockholder, Louis G. Navellier. The Subadviser's address is: 1 East
Liberty, Third Floor, Reno, Nevada, 89501. The Subadvisory Agreement
for Special Fund was approved by the Trustees of the Fund on December 1,
1995, and by vote of the Shareholders of the Fund on January 30, 1996.
The Subadvisory Agreement for Growth + Value Fund was approved by the
Trustees of the Fund on July 31, 1996. Each Subadvisory Agreement may
be terminated without payment of any penalty by Northstar, Navellier,
the Trustees of such Fund, or the

<PAGE>

shareholders of such Fund on not more than 60 days' and not less than 30
days' prior written notice. Otherwise, each 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
applicable Fund, or the vote of a majority of the outstanding voting
securities of such Fund, and the vote, cast in person at a meeting duly
called and held, of a majority of the Trustees of such Fund who are not
parties to the Subadvisory Agreement or "interested persons" (as defined
in the 1940 Act) of any such Party.

Wilson/Bennett Capital Management, Inc. ("Wilson/Bennett"), serves as
subadviser with respect to the common stock portion of the Income and
Growth Fund pursuant to a Subadvisory Agreement dated July 31, 1996
between Northstar and Wilson/Bennett. Northstar will make all
determinations as to the allocation of the Fund's assets, will direct
all trades and will manage the portion of the Fund's assets in
convertible and fixed income securities. Wilson/Bennett's principal
address is Suite 250, 8260 Greensboro Drive, McLean, Virginia 22102.
Wilson/Bennett currently manages approximately $57 million of assets for
individuals, pension plans and corporations. For its services,
Wilson/Bennett will receive from Northstar, not the Funds, a monthly fee
at an annual rate equal to 0.20% of the first $125 million of average
daily net assets of the Fund managed by Wilson/Bennett, 0.25% of the
next $125 million, and 0.30% for assets in excess of $250 million. The
Subadvisory Agreement for Income and Growth Fund was approved by the
Trustees of the Fund on April 25, 1996 , and by vote of the shareholders
of the Fund on July 15, 1996. The Subadvisory Agreement may be
terminated without payment of any penalty by Northstar, Wilson/Bennett,
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.

Northstar Administrators Corporation serves as administrator for the
Funds, pursuant to an Administrative Services Agreement with each Fund.
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 Funds' business, except for those
services performed by Northstar under the Investment Advisory
Agreements, the custodian for the Funds under the Custodian Agreements,
the transfer agent for the Funds under the Transfer Agency Agreements,
and such other service providers as may be retained by the Funds from
time to time. 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 Northstar for compliance with
requirements under applicable law and with the investment policies and
restrictions of the Funds. The Administrator is an affiliate of
Northstar. The address of the Administrator is: Two Pickwick Plaza,
Greenwich, Connecticut 06830.

The Administrative Services Agreement was approved by the Trustees of
the Trust on behalf of the Income and Growth Fund and High Total Return
Fund on October 23, 1993, and continued

<PAGE>

in effect for a period of two years. The Agreement was renewed by the
Trustees for one year on October 31, 1995 and will continue in effect
from year to year thereafter, provided such continuance is approved
annually by a majority of the Trustees of the Trust. The Administrator's
fee is accrued daily against the value of each Fund's net assets and is
payable by each Fund monthly at an annual rate of .10% of each Fund's
average daily net assets. In addition, the Administrator charges an
annual account fee of $5.00 for each account of beneficial owners of
shares in a Fund for providing certain shareholder services and
assisting broker-dealer shareholder accounts.

Each Administrative Services Agreement for the remaining Funds was
approved by the Trustees of the particular Fund on March 1, 1995. The
Agreements provide that until June 2, 1997, the Administrator will not
receive any compensation under such agreements and thereafter shall
receive such compensation as the Board of Trustees of the Funds may
determine. The Agreements will continue in effect until June 2, 1997,
and from year to year thereafter, provided such continuance is approved
annually by a majority of the Disinterested Trustees of the affected
Fund.

During the fiscal years ended October 31, 1995 and 1994, the Funds
listed below paid Northstar and the Administrator the following
investment advisory and administrative fees, respectively:

TOTAL ADVISORY AND ADMINISTRATIVE FEES PAID
DURING FISCAL YEAR ENDED OCTOBER 31,

1995 1995 1994 1994
Advisory Fees Admin. Fee Advisory Fee Admin. Fee

Income and Growth $1,158,432 $154,457 $509,440(1) $64,452
High Total Return Fund 941,310 125,508 382,777(2) 49,816

(1) Does not reflect expense reimbursement of $57,594.

(2) Does not reflect expense reimbursement of $72,201.

Prior to June 5, 1995, the Special, Growth, Balance Sheet
Opportunities, Government Securities, Strategic Income and High Yield
Funds were managed by Boston Security Counselors, Inc. ("BSC") and did not
utilize the services of an administrator. During the fiscal years ended December
31, 1995, 1994 and 1993, the Funds listed below paid Northstar or BSC the
following investment advisory fees:

25
<PAGE>

TOTAL ADVISORY FEES PAID
DURING FISCAL YEAR ENDED DECEMBER 31,

1995 1994 1993
Special Fund 287,311(2) 268,139 145,178

Growth Fund 593,282 604,576 517,203

Balance Sheet
Opportunities Fund 477,095 519,729 447,631
Government
Securities Fund(1) 678,996 747,846 767,370
Strategic
IncomeFund(3) 252,201 57,726 0

High Yield 683,323 622,761 432,063

(1) Net of waiver of investment advisory fees of $301,776, $332,370 and
$341,054 for the years ended December 31, 1995, 1994 and 1993,
respectively.

(2) Does not reflect expense reimbursement of $733.

(3) Does not reflect expense reimbursement of $57,336 in 1994, and
$87,944 for the year ended December 31, 1995.

NET ASSET VALUE

For each Fund in the Northstar Trust, equity securities are valued at
the last sale price on the exchange or in the principal OTC market in
which such securities are being valued, or lacking any sales, at the
last available bid price. Prices of long-term debt securities are valued
on the basis of last reported sales price, or if no sales are reported,
the value is determined based upon the mean of representative quoted bid
or asked prices for such securities obtained from a quotation reporting
system or from established market makers, or at prices for securities of
comparable maturity, quality and type. For the Northstar Special,
Growth, Balance Sheet Opportunities, Government Securities, Strategic
Income and High Yield Funds, portfolio securities, options and futures
contracts and options thereon that are traded on national exchanges or
in the NASDAQ System are valued at the last sale or settlement price on
the exchange or market where primarily traded or, if none that day, at
the mean of the last reported bid and asked prices, using prices as of
the close of trading on the applicable exchange or market. Securities
and options that are traded in the OTC market (other than on the NASDAQ
System) are valued at the mean of the last available bid and asked
prices. Such valuations are based on quotations of one or more dealers
that make markets in the securities as obtained from such dealers or
from a pricing service. Securities (including OTC options) for which
market quotations are not readily available (which may constitute a
major portion of the High Yield Fund's portfolio) and other assets are
valued at their fair value as determined by or under the direction of
the Trustees. Such fair value may be determined by various methods,
including utilizing information furnished by pricing services that
determine calculations for such securities using methods based, among other

<PAGE>

things, upon market transactions for comparable securities and various
relationships between securities that are generally recognized as
relevant.

The net asset value of each Fund's shares fluctuates and is determined
separately for each class as of the close of regular trading on the New
York Stock Exchange (currently 4:00 p.m. EST), on each business day that
the Exchange is open. Net asset value per share is computed by
determining the value of a Fund's assets (securities held plus cash and
other assets, including dividend and interest accrued but not received)
less all liabilities of the Fund (including accrued expenses other than
class specific expenses), and dividing the result by the total number of
shares outstanding at such time. The specific expenses borne by each
class of shares will be deducted from that class and will result in
different net asset values and dividends. The net asset value per share
of the Class B, Class C and Class T shares of each Fund will generally
be lower than that of the Class A or Class I shares because of the
higher class-specific expenses borne by each of the Class B, Class C and
Class T shares. Under normal market conditions, daily prices for
securities are obtained from independent pricing services, determined by
them in accordance with the registration statement for each Fund.
Securities are valued at market value or, if a market quotation is not
readily available, at their fair value, determined in good faith under
procedures established by and under the supervision of the Trustees.
Money market instruments maturing within 60 days are valued using the
amortized cost method of valuation. This involves valuing a security at
cost on the date of acquisition and thereafter assuming a constant
accretion of a discount or amortization of a premium to maturity,
regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price a Fund would receive
if it sold the instrument. See "How Net Asset Value is Determined" in
the Prospectus.

PURCHASES AND REDEMPTIONS

Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to a front-end or
contingent deferred sales load. There is no sales charge for qualified
persons. "Qualified Persons" are the following (a) active or retired Trustees,
Directors, Officers, Partners or Employees (including immediate family)
of (i) Northstar or any of its affiliated companies, (ii) the Funds or
any Northstar affiliated investment company or (iii) dealers having a
sales agreement with the Underwriter, (b) trustees or custodians of any
qualified retirement plan or IRA established for the benefit of a person
in (a) above; (c) dealers, brokers or registered investment advisers
that have entered into an agreement with the Underwriter providing for
the use of shares of the Funds in particular investment products such as
"wrap accounts" or other similar managed accounts for the benefit of the
clients of such brokers, dealers and registered investment advisers, and
(d) pension, profit sharing or other benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457
of the Code, provided that such shares are purchased by an employer
sponsored plan with at least 100 eligible employees. Class A shares of
the Funds may be purchased at net asset value, through a dealer, where
the amount invested represents redemption proceeds from another open-end
fund sold with a sales load and the same or similar investment
objective, and PROVIDED the following conditions are met: such
redemption occurred no more than 60 days

<PAGE>

prior to the purchase of shares of a Northstar Fund, the redeemed shares
were held for at least six months prior to redemption, and the proceeds
of the redemption are sent directly to Northstar or its agent, or
maintained in cash or a money market fund. No commissions will be paid
to dealers in connection with such purchases. There is also no initial
sales charge for "Purchasers" (defined below) if the initial amount
invested in the Funds is at least $1,000,000 or the Purchaser signs a
$1,000,000 Letter of Intent, as hereinafter defined.

REDUCED SALES CHARGES ON CLASS A SHARES. Investors choosing the initial
sales alternative may under certain circumstances be entitled to pay
reduced sales charges. The sales charge varies with the size of the
purchase and reduced charges apply to the aggregate of purchases of a
Fund made at one time by any "Purchaser," which term includes (i) an
individual and his/her spouse and their children under the age of 21,
(ii) a trustee or fiduciary purchasing for a single trust, estate or
single fiduciary account (including IRAs, pension, profit-sharing or
other employee benefit trusts created pursuant to a plan qualified under
Section 401 of the Code, a Simplified Employee Pension ("SEP"), Salary
Reduction and other Elective Simplified Employee Pension Accounts
("SARSEP")) and 403(b) and 457 plans, although more than one beneficiary
or participant is involved; and (iii) any other organized group of
persons, whether incorporated or not, provided the organization has been
in existence for at least six months and has some purpose other than the
purchase at a discount of redeemable securities of a registered
investment company. The circumstances under which "Purchasers" may pay
reduced sales charges are described in the Prospectus.

REDEMPTIONS. The right to redeem shares may be suspended and payment
therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or, if
permitted by rules of the SEC, during periods when trading on the
Exchange is restricted, or during any emergency that makes it
impracticable for any Fund to dispose of its securities or to determine
fairly the value of its net assets or during any other period permitted
by order of the SEC for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received
for shares purchased have cleared, but payment will be forwarded
immediately upon the funds becoming available. Class B, Class C and
Class T shareholders will be subject to the applicable deferred sales
charge, if any, for their shares at the time of redemption.

The contingent deferred sales load will be waived with respect to Class
T shares in the following instances: (i) any partial or complete
redemption of shares of a shareholder who dies or becomes disabled, so
long as the redemption is requested within one year of death or the
initial determination of disability; (ii) any partial or complete
redemption in connection with distributions under Individual Retirement
Accounts ("IRAs") or other qualified retirement plans in connection with
a lump-sum or other form of distribution following retirement within the
meaning of Section 72(t)(2)(A)(iv) or (v) of the Code, disability or
death, or after attaining the age of 59 1/2 in the case of an IRA, Keogh
Plan or custodial account pursuant to Section 403(b)(7) of the Code, or
on any redemption that results from a tax-free return of an excess
contribution pursuant to Section 408(d)(4) or (5) of the Code or Section
4979(f) of the Code; (iii) redemptions effected pursuant to the Funds'
right to liquidate a

<PAGE>

shareholder's account if the aggregate net asset
value of the shares held in the account is less than $500; (iv)
redemptions effected by (A) employees of The Advest Group, Inc. ("AGI")
and its subsidiaries, (B) IRAs, Keogh plans and employee benefit plans
for those employees, and (C) spouses and minor children of those
employees, so long as orders for shares are placed on behalf of the
spouses or children by the employees; (v) redemptions effected by
accounts managed by investment advisory subsidiaries of AGI registered
under the Investment Advisers Act of 1940; and (vi) redemptions in
connection with exchanges of Fund Class T shares, including shares of
the Class T account of the Money Market Portfolio.

EXCHANGES. The following conditions must be met for all exchanges among
the Funds and the Money Market Portfolio: (i) the shares that will be
acquired in the exchange (the "Acquired Shares") are available for sale
in the shareholder's state of residence; (ii) the Acquired shares will
be registered to the same shareholder account as the shares to be
surrendered (the "Exchanged Shares"); (iii) the Exchanged Shares must
have been held in the shareholder's account for at least 30 days prior
to the exchange; (iv) except for exchanges into the Money Market
Portfolios, the account value of the Fund whose shares are to be
acquired must equal or exceed the minimum initial investment amount
required by that Fund after the exchange is implemented; and (v) a
properly executed exchange request has been received by the Transfer
Agent.

Each Fund reserves the right to delay the actual purchase of the
Acquired Shares for up to five business days if it determines that it
would be disadvantaged by an immediate transfer of proceeds from the
redemption of Exchanged Shares. Normally, however, the redemption of
Exchanged Shares and the purchase of Acquired Shares will take place on
the day that the exchange request is received in proper form. Each Fund
reserves the right to terminate or modify its exchange privileges at any
time upon prominent notice to shareholders. Such notice will be given at
least 60 days in advance. It is the policy of Northstar to discourage
and prevent frequent trading by shareholders among the Funds in response
to market fluctuations. Accordingly, in order to maintain a stable asset
base in each Fund and to reduce administrative expenses borne by each
Fund, Northstar generally restricts shareholders to a maximum of six
exchanges out of a Fund each calendar year. If a shareholder exceeds
this limit, future exchange requests may be denied.

CONVERSION FEATURE. Class B shares of each Fund will automatically convert to
Class A shares without a sales charge at the relative net asset values of each
of the classes after eight years from the acquisition of the Class B shares,
and as a result, will thereafter be subject to the lower distribution
fee (but same service fee) under the Class A Rule 12b-1 plan for each
Fund. Class T Shares convert to Class A shares at the end of the month
that is the later of (i) eight years after the Class T Shares were
purchased or (ii) May 31, 1998.

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to so qualify, the Fund must,
among other things, (i) derive each taxable year at least 90% of its
gross income from dividends, interest, payments with respect to certain
securities loans, gains from the sale of securities or foreign
currencies, or other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its
business of investing in stock, securities or currencies; (ii) derive
less than 30% of its gross income each taxable year from the sale or
other disposition of certain assets, including securities, held for less
than three months (the "30% Limitation"); and (iii) at the end of each
quarter of the taxable year maintain at least 50% of the value of its
total assets in cash, government securities, securities of other
regulated investment companies, and other securities of issuers that
represent, with respect to each issuer, no more than 5% the value of the
Fund's total assets and 10% of the outstanding voting securities of such
issuer, and with no more than 25% of its assets invested in the
securities (other than those of the U.S. Government or other regulated
investment companies) of any one issuer or of two or more issuers that
the Fund controls and that are engaged in the same, similar or related
trades and businesses. As a regulated investment company, each Fund
generally will not be subject to federal income tax on its income and
gains that it distributes to shareholders, if at least 90% of its
investment company taxable income (which includes dividends, interest
and the excess of any short-term capital gains over long-term capital
losses) for the taxable year is distributed.

An excise tax at the rate of 4% will be imposed on the excess, if any,
of a Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of a Fund's
ordinary income for the calendar year plus 98% of its capital gain net
income recognized during the one-year period ending on October 31 plus
undistributed amounts from prior years. Each Fund intends to make
distributions sufficient to avoid imposition of the excise tax. A
distribution will be treated as paid on December 31 of the current
calendar year if it is declared by the Fund during October, November or
December of the year with a record date in such a month and paid by the
Fund during January of the following year. Such distributions will be
taxable as if received on December 31 in the year they are declared by
the Fund, rather than the year in which they are received.

The taxation of equity options and OTC options on debt securities is
governed by Code section 1234. Pursuant to Code section 1234, the
premium received by a Fund for selling a put or call option is not
included in income at the time of receipt. If the option expires, the
premium is short-term capital gain to the Fund. If the Fund enters into
a closing transaction, the difference between the amount paid to close
out its position and the premium received is short-term capital gain or
loss. If a call option written by a Fund is exercised, thereby requiring
the Fund to sell the underlying security, the premium will increase the
amount realized upon the sale of such security and any resulting gain or
loss will be a capital gain or loss, and will be long-term or short-term
depending upon the holding period of the security. With respect to a put
or call option that is purchased by a Fund, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be
long-term or short-term, depending upon the holding period of the
option. If the option expires, the resulting loss is a capital loss and
is long-term or short-term, depending upon

<PAGE>

the holding period of the option. If the option is exercised, the cost
of the option, in the case of a call option, is added to the basis of
the purchased security and, in the case of a put option, reduces the
amount realized on the underlying security in determining gain or loss.

Certain options, futures contracts and forward contracts in which a Fund
may invest are "section 1256 contracts." Gains or losses on section 1256
contracts are generally considered 60% long-term and 40% short-term
capital gains or losses ("60/40 gains or losses"); however, foreign
currency gains or losses (as discussed below) arising from certain
section 1256 contracts may be treated as ordinary income or loss. Also,
section 1256 contracts held by a Fund at the end of each taxable year
(and, generally, for purposes of the 4% excise tax, on October 31 of
each year) are treated as sold on such date at fair market value,
resulting in unrealized gains or losses being treated as though they
were realized.

Hedging transactions undertaken by a Fund may result in straddles for
U.S. federal income tax purposes. The straddle rules may accelerate
income to a Fund, defer losses to a Fund, and affect the character of
gains (or losses) realized by a Fund. Hedging transactions may increase
the amount of short-term capital gain realized by a Fund that is taxed
as ordinary income when distributed to shareholders. A Fund may make one
or more of the various elections available under the Code with respect
to hedging transactions. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from
the affected positions will be determined under rules that vary
according to the elections made. The 30% limitation may limit the extent
to which a Fund will be able to engage in transactions in options,
futures contracts and forward contracts.

Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time a Fund accrues interest or other
receivables, or accrues expenses or other liabilities, denominated in a
foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary
income or ordinary loss. Similarly, on disposition of debt securities
denominated in a foreign currency and certain options, futures and
forward contracts, gains or losses attributable to fluctuations in the
value of foreign currency between the date of acquisition of the
security or contract and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under the Code
as "section 988" gains or losses, may increase or decrease the amount of
a Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.

A Fund will not realize gain or loss on a short sale of a security until
it closes the transaction by delivering the borrowed security to the
lender. All or a portion of any gain arising from a short sale may be
treated as short-term capital gain, regardless of the period for which
the Fund held the security used to close the short sale. In addition,
the Fund's holding period for any security that is substantially
identical to that which is sold short may be reduced or eliminated as a
result of the short sale.

Investments by a Fund in zero coupon securities will result in income to
the Fund equal to a portion of the excess of the face value of the
securities over their issue price (the "original issue

<PAGE>

discount") each year that the securities are held, even though the Fund
receives no cash interest payments. This income is included in
determining the amount of income that the Fund must distribute to
maintain its status as a regulated investment company and to avoid the
payment of federal income tax and the 4% excise tax. If a Fund invests
in certain high yield original issue discount obligations issued by
corporations, a portion of the original issue discount accruing on the
obligations may be eligible for the deduction for dividends received by
corporations. In such event, a portion of the dividends of investment
company taxable income received from the Fund by its corporate
shareholders may be eligible for this deduction.

Gain derived by a Fund from the disposition of any market discount bonds
(i.e., bonds purchased other than at original issue, where the face
value of the bonds exceeds their purchase price) held by the Fund will
be taxed as ordinary income to the extent of the accrued market discount
on the bonds, unless the Fund elects to include the market discount in
income as it accrues.

If a 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.

Income received by the Funds from sources within foreign countries may
be subject to withholding and other taxes imposed by such countries. If
more than 50% of the value of a Fund's total assets at the close of its
taxable year consists of securities of foreign corporations, the Fund
will be eligible and may elect to "pass through" to the Fund's
shareholders the amount of foreign taxes paid by the Fund. Pursuant to
this election, a shareholder will be required to include in gross income
(in addition to dividends actually received) its pro rata share of the
foreign taxes paid by the Fund, and may be entitled either to deduct its
pro rata share of the foreign taxes in computing its taxable income or
to use the amount as a foreign tax credit against its U.S. Federal
income tax liability, subject to limitations. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year
whether the foreign taxes paid by the Fund will "pass through" for that
year. If a Fund is not eligible to make the election to "pass through"
to its shareholders its foreign taxes, the foreign taxes it pays will
reduce its investment company taxable income and distributions by the
Fund will be treated as U.S. source income.

Generally, a credit for foreign taxes is subject to the limitation that
it may not exceed the shareholder's U.S. tax attributable to its foreign
source taxable income. For this purpose, if the pass-through election is
made, the source of the Fund's income flows through to its shareholders.
With respect to the Funds, gains from the sale of securities will be
treated as derived from

<PAGE>

U.S. sources and certain currency fluctuation gains, including
fluctuation gains from foreign currency denominated debt securities,
receivables and payables, and options, futures and forward transactions,
will be treated as ordinary income derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign
source passive income (as defined for purposes of the foreign tax
credit), including the foreign source passive income passed through by
the Funds.

The current position of the Internal Revenue Service (the "IRS")
generally is to treat a regulated investment company, such as the
Special Fund, as owning its proportionate share of the income and assets
of any partnership in which it is a partner, in applying the 90%
qualifying income requirement, the 30% Limitation and the asset
diversification requirements that, as described above, each Fund must
satisfy to qualify as a regulated investment company under the Code.
These requirements may limit the extent to which the Special Fund may
invest in limited partnerships, especially in the case of limited
partnerships that do not primarily invest in a diversified portfolio of
stocks and securities.

Dividends paid out of a Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. If a portion of a
Fund's income consists of dividends paid by U.S. corporations, a portion
of the dividends paid by the Fund may be eligible for the corporate
dividends-received deduction. Distributions of net capital gains (the
excess of net long-term capital gains over net short-term capital
losses), if any, designated as capital gain dividends are taxable as
long-term capital gains, regardless of how long the shareholder has held
the Fund's shares, and are not eligible for the dividends-received
deduction. Shareholders receiving distributions in the form of
additional shares, rather than cash, generally will have a cost basis in
each such share equal to the net asset value of a share of the relevant
Fund on the reinvestment date. A distribution of an amount in excess of
a Fund's current and accumulated earnings and profits will be treated by
a shareholder as a return of capital that is applied against and reduces
the shareholder's basis in his or her shares. To the extent that the
amount of any such distribution exceeds the shareholder's basis in his
or her shares, the excess will be treated by the shareholder as gain
from a sale or exchange of the shares. Shareholders will be notified
annually as to the U.S. federal tax status of distributions, and
shareholders receiving distributions in the form of additional shares
will receive a report as to the net asset value of those shares.

Upon the sale or other disposition of shares of a Fund, a shareholder
may realize a capital gain or loss that will be long-term or short-term,
generally depending upon the shareholder's holding period for the
shares. Any loss realized on a sale or exchange will be disallowed to
the extent the shares disposed of are replaced within a period of 61
days beginning 30 days before and ending 30 days after disposition of
the shares. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss. Any loss realized by a
shareholder on a disposition of Fund shares held by the shareholder for
six months or less will be treated as a long-term capital loss to the
extent of any distributions of net capital gains received by the
shareholder with respect to such shares.

Under certain circumstances, the sales charge incurred in acquiring
shares of a Fund may not be taken into account in determining the gain
or loss on the disposition of those shares. This rule

<PAGE>

applies where shares of a Fund originally acquired with a sales charge
are disposed of within 90 days after the date on which they were
acquired and new shares of a regulated investment company are acquired
without a sales charge or at a reduced sales charge. In that case, the
gain or loss realized on the disposition will be determined by excluding
from the tax basis of the shares all or a portion of the sales charge
incurred in acquiring those shares. This exclusion applies to the extent
that the otherwise applicable sales charge with respect to the newly
acquired shares is reduced as a result of the shareholder having
incurred a sales charge paid for the new shares. This rule may be
applied to successive acquisitions of shares of stock.

Distributions by a Fund reduce the net asset value of that particular
Fund's shares. Should a distribution reduce the net asset value of a
share below a shareholder's cost for the share, such a distribution
nevertheless generally would be taxable to the shareholder as ordinary
income or long-term capital gain, even though, from an investment
standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications
of buying shares just prior to a distribution by a Fund. The price of
shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.

Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from a Fund ("backup withholding") at
the rate of 31%. Corporate shareholders and certain other shareholders
specified in the Code generally are exempt from such backup withholding.
Generally, shareholders subject to backup withholding will be (i) those
for whom a certified taxpayer identification number is not on file with
a Fund, (ii) those about whom notification has been received (either by
the shareholder or by a Fund) from the IRS that they are subject to
backup withholding or (iii) those who, to a Fund's knowledge, have
furnished an incorrect taxpayer identification number. Generally, to
avoid backup withholding, an investor must, at the time an account is
opened, certify under penalties of perjury that the taxpayer
identification number furnished is correct and that he or she is not
subject to backup withholding.

The foregoing discussion relates solely to U.S. Federal income tax law.
Dividends and distributions also may be subject to state, local and
foreign taxes. Dividends paid by a Fund from income attributable to
interest on obligations of the U.S. Government and certain of its
agencies and instrumentalities may be exempt from state and local taxes
in certain states. Shareholders should consult their tax advisers
regarding the possible exclusion of this portion of their dividends for
state and local tax purposes. Non-U.S. investors also should consult
their tax advisers concerning the tax consequences of ownership of
shares of a Fund, including the possibility that distributions may be
subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty).

Shareholders of Class A, Class B and Class C shares may direct that
income dividends and capital gain distributions be paid to them through
various options listed in the "Dividends and Distributions Reinvestment
Options" section of the Funds' current Prospectus. If a shareholder
selects either of two such options (that: (a) income dividends be paid
in cash and capital gain distributions be paid in additional shares of
the same class of a designated Fund at net asset

<PAGE>

value; or (b) income dividends and capital gain distributions both be
paid in cash), and the dividend/distribution checks cannot be delivered,
or, if such checks remain uncashed for six months, each Fund reserves
the right to reinvest the dividend or distribution in the shareholder's
account at the then-current net asset value and to convert the
shareholder's election to automatic reinvestment in shares of the Fund
from which the distributions were made. Each Fund has received from the
IRS, rulings to the effect that (i) the implementation of the multiple
class purchase arrangement will not result in a Fund's dividends or
distributions constituting "preferential dividends" under the Code, and
(ii) that any conversion feature associated with a class of shares does
not constitute a taxable event under federal income tax law.

UNDERWRITER AND DISTRIBUTION SERVICES

Pursuant to Underwriting Agreements, Northstar Distributors, Inc. is the
Underwriter for each Fund and as such conducts a continuous offering
pursuant to a "best efforts" arrangement requiring it to take and pay
for only such securities as may be sold to the public. The Underwriter
is an affiliate of the Adviser and the Administrator.

The Underwriting Agreements may be terminated at any time on not more
than 60 days' written notice, without payment of a penalty, by the
Underwriter, by vote of a majority of the outstanding class of voting
securities of the affected Fund, or by vote of a majority of the
Trustees of such Fund, who are not "interested persons" of the Fund and
who have no direct or indirect financial interest in the operation of
the Plan or in any agreements. The Underwriting Agreements will terminate
automatically in the event of their assignment.

In addition to the amount paid to dealers pursuant to the sales charge
table in the Prospectus, the Underwriter from time to time pays, from
its own resources or pursuant to the Plans, a bonus or other incentive
to dealers (other than the Underwriter) that employ a registered
representative who sells a minimum dollar amount of the shares of a Fund
during a specific period of time. Dealers may not use sales of any of
the Fund's shares to qualify for or participate in such programs to the
extent such may be prohibited by a dealer's internal procedures or by
the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. Such bonuses or other
incentives take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying
registered representatives and members of their families to places
within or without the United States, or other bonuses such as
certificates for airline tickets, dining establishments or the cash
equivalent of such bonuses. The Underwriter, from time to time, reallows
all or a portion of the sales charge on Class A shares, which it
normally reallows to individual selling dealers. However, such
additional reallowance generally will be made only when the selling
dealer commits to substantial marketing support such as internal
wholesaling through dedicated personnel, internal communications and
mass mailings.

Each Fund has adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of the Fund (collectively the
"Plans"). The Plans permit each Fund to compensate the Underwriter in
connection with activities intended to promote the sale of shares of
each class of shares of each Fund.

<PAGE>

Pursuant to the Plan for Class A shares, each Fund may compensate the
Underwriter up to 0.30% of average daily net assets of such Fund's Class
A shares. Under the Plans for Class B and Class C shares, each Fund may
compensate the Underwriter up to 1.00% of the average daily net assets
attributable to the respective class of such Fund. Pursuant to the Plan
for Class T shares, each Fund compensates the Underwriter in an amount
equal to 0.95% (in the case of Special Fund, Growth Fund, and Strategic
Income Fund), 0.75% (in the case of Balance Sheet Opportunities Fund)
and 0.65% (in the case of Government Securities Fund and High Yield
Fund) of annual average daily net assets of such Fund's Class T shares.
However, each of the Class T Plans provides for compensation of up to
1.00% of annual average daily net assets. Expenditures by the
Underwriter under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Funds (including underwriting fees
and financing expenses incurred in connection with the sale of Class B
and Class C shares); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers
and other financial institutions that have entered into agreements with
the Underwriter in the form of a Dealer Agreement for Northstar Funds
for services rendered in connection with the sale and distribution of
shares of the Funds; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to
the Funds; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Funds' Prospectus and SAI for
distribution to potential investors; and (vii) other activities that are
reasonably calculated to result in the sale of shares of the Funds. With
respect to each Class T Plan, it is anticipated that all of the payments
received by the Underwriter under the Plan will be paid to Advest as
compensation for its prior distribution related and current shareholder
servicing related activities in connection with the Class T Shares.

A portion of the fees paid to the Underwriter pursuant to the 12b-1
plans not exceeding 0.25% annually of the average daily net assets of
each Fund's shares may be paid as compensation for providing services to
each Fund's shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee"). In order
to receive Service Fees under the Plans, participants must meet such
qualifications as are established in the sole discretion of the
Underwriter, such as services to each Fund's shareholders; or services
providing each Fund with more efficient methods of offering shares to
coherent groups of clients, members or prospects of a participant; or
services permitting purchases or sales of shares, or transmission of
such purchases or sales by computerized tape or other electronic
equipment; or other processing.

If the Plans are terminated in accordance with their terms, the
obligations of a Fund to compensate the Underwriter for distribution
related services pursuant to the Plans will cease; however, subject to
approval by the Trustees, including a majority of the independent
Trustees, a Fund may continue to make payments past the date on which
each Plan terminates up to the annual limits set forth in each Plan for
the purpose of compensating the Underwriter for services that were
incurred during the term of the Plan.

The Trustees have concluded that there is a reasonable likelihood that
the Plans will benefit each Fund and its shareholders and that the Plans
should result in greater sales and/or fewer

<PAGE>

redemptions of Fund shares. On a quarterly basis, the Trustees will
review a report on expenditures under the Plans and the purposes for
which expenditures were made. The Trustees will conduct an additional,
more extensive review annually in determining whether the Plans shall be
continued. By their terms, continuation of the Plans from year to year
is contingent on annual approval by a majority of the Trustees acting
separately on behalf of each Fund and by a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of the Plans
or any related agreements (the "Plan Trustees"). The Plans provide that
they may not be amended to increase materially the costs that a Fund may
bear pursuant to the applicable Plan without approval of the
shareholders of the affected Fund and that other material amendments to
the Plans must be approved by a majority of the Plan Trustees acting
separately on behalf of each Fund, by vote cast in person at a meeting
called for the purpose of considering such amendments. The Plans further
provide that while each plan is in effect, the selection and nomination
of Trustees who are not "interested persons" shall be committed to the
discretion of the Trustees who are not "interested persons." A Plan may
be terminated at any time by vote of a majority of the Plan Trustees or
a majority of the outstanding Class of shares of the affected Fund to
which the Plan relates.

During their fiscal year-ended October 31, 1995, each class of shares of
the Funds listed below paid the following 12b-1 distribution and service
fees pursuant to the Plan of Distribution for each class:

CLASS A CLASS B CLASS C

Income and Growth Fund $141,250 $473,783 $313,742

High Total Return Fund $ 99,831 $535,252 $ 49,292

For the year ended October 31, 1995, expenses incurred by the Distributor for
distribution related activities with respect to each class of shares of each
Fund listed below were as follows:

INCOME AND GROWTH

CLASS A CLASS B CLASS C

Salaries/Overrides $ 347,697 $ 55,653 $110,521
Expenses/Convention Expense $ 168,576 $ 56,473 $ 21,461
Commissions Paid $ 0 $1,070,218 $467,143
Marketing Expense $ 86,328 $ 0 $ 0
Total $ 602,601 $1,182,344 $599,125

EXPENSE HIGH TOTAL RETURN FUND

<PAGE>

CLASS A CLASS B CLASS C

Salaries/Overrides $530,951 $ 176,089 $ 23,877
Expenses/Convention Expense $149,561 $ 60,883 $ 5,069
Commissions Paid $ 0 $ 3,009,409 $ 90,784
Marketing Expense $ 70,460 $ 0 $ 0
Total $750,972 $ 3,246,381 $ 119,730

For the following Funds' fiscal year ended October 31, 1995, the Distributor
received the following amounts in sales charges, after reallowance to Dealers.

UNDERWRITING FEES

CLASS A CLASS B CLASS C

Income and Growth Fund $221,615 $490,136 $315,723

High Total Return Fund $196,152 $548,708 $ 52,534

During their fiscal year ended December 31, 1995, each class of shares of the
Funds listed below, paid the following 12b-1 distribution and service fees
pursuant to the Distribution Plan for each class.

CLASS A CLASS B CLASS C CLASS T

Special Fund $ 3,463 $ 5,097 $ 283 $ 347,851
Growth Fund $ 2,523 $ 5,718 $ 245 $ 737,831
Balance Sheet Fund $ 835 $ 5,264 $ 449 $ 544,122
Government Securities $ 1,392 $ 6,354 $ 32 $ 973,588
Strategic Income Fund $ 93,589 $148,079 $ 9,767 $ 278,019
High Yield Fund $ 7,358 $ 59,176 $ 8,287 $ 927,236

During the fiscal year ended December 31, 1995, expenses incurred by the
Distributor (or Advest with respect to Class T Shares prior to June 2,
1995) for certain distribution related activities with respect to each
class of shares of the Funds listed below were as follows:

EXPENSE SPECIAL FUND

CLASS A CLASS B CLASS C CLASS T

Salaries/Overrides $ 7,719 $ 4,473 $ 173 $ 0
Expenses/Convention Expense $ 2,375 $ 394 $ 14 $ 0
Commissions Paid $ 0 $60,874 $ 600 $200,958

<PAGE>

Marketing Expense $ 884 $ 0 $ 0 $ 0
Total $10,978 $65,741 $ 787 $200,958

EXPENSE GROWTH FUND
CLASS A CLASS B CLASS C CLASS T

Salaries/Overrides $ 5,125 $ 4,369 $ 239 $ 0
Expenses/Convention Expense $ 1,742 $ 437 $ 12 $ 0
Commissions Paid $ 0 $ 75,145 $ 482 $ 437,610
Marketing Expense $ 675 $ 0 $ 0 $ 0
Total $ 7,542 $ 79,951 $ 733 $ 437,610

EXPENSE BALANCE SHEET OPPORTUNITIES FUND
CLASS A CLASS B CLASS C CLASS T

Salaries/Overrides $ 3,758 $ 4,132 $ 598 $ 0
Expenses/Convention Expense $ 584 $ 407 $ 21 $ 0
Commissions Paid $ 0 $ 69,328 $ 2,130 $316,699
Marketing Expense $ 257 $ 0 $ 0 $ 0
Total $ 4,599 $ 73,777 $ 2,749 $316,699

EXPENSE GOVERNMENT SECURITIES FUND
CLASS A CLASS B CLASS C CLASS T

Salaries/Overrides $ 17,259 $ 6,140 $ 93 $ 0
Expenses/Convention Expense $ 1,070 $ 484 $ 0 $ 0
Commissions Paid $ 0 $ 95,686 $ 45 $565,766
Marketing Expense $ 736 $ 0 $ 0 $ 0
Total $ 19,065 $102,310 $ 138 $565,766

EXPENSE STRATEGIC INCOME FUND
CLASS A CLASS B CLASS C CLASS T

Salaries/Overrides $122,525 $ 29,029 $ 4,915 $ 0
Expenses/Convention Expense $ 55,380 $ 15,605 $ 654 $ 0
Commissions Paid $ 0 $ 503,657 $ 18,664 $ 169,468
Marketing Expense $ 25,935 $ 0 $ 0 $ 0
Total $203,840 $ 548,291 $ 24,233 $ 169,468

<PAGE>

EXPENSE HIGH YIELD FUND
CLASS A CLASS B CLASS C CLASS T

Salaries/Overrides $ 40,871 $ 72,434 $ 9,138 $ 0
Expenses/Convention Expense $ 5,185 $ 4,463 $ 351 $ 0
Commissions Paid $ 0 $1,154,747 $37,794 $545,444
Marketing Expense $ 2,298 $ 0 $ 0 $ 0
Total $ 48,354 $1,231,644 $47,283 $545,444

For the following Funds' fiscal year ended December 31, 1995, the
Distributor (or Advest) received the following amounts in sales charges,
after reallowance to Dealers:

CLASS A CLASS B CLASS C CLASS T

Special Fund $ 21,128 $ 800 $ 0 $156,167
Growth Fund $ 15,602 $ 1,644 $ 2 $121,171
Balance Sheet Fund $ 18,512 $ 444 $ 1 $113,882
Government Securities $ 46,349 $ 910 $ 0 $326,917
Strategic Income $ 43,244 $ 9,438 $ 1,136 $ 43,507
High Yield Fund $ 214,275 $ 12,628 $ 3,561 $403,247

TRUSTEES AND OFFICERS

The Trustees and principal Officers of each 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 is Two
Pickwick Plaza, Greenwich, Connecticut 06830.

ROBERT B. GOODE, JR., Trustee. Age: 66. Currently 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. Since October 1993,
Trustee of the Northstar affiliated investment companies.

PAUL S. DOHERTY, Trustee. Age: 62. President, Doherty,
Wallace, Pillsbury and Murphy, P.C., Attorneys. Director,
Tambrands, Inc. Since October 1993, Trustee of the Northstar
affiliated investment companies.

DAVID W. WALLACE, Trustee. Age: 72. Chairman of Putnam Trust
Company, Lone Star Industries and FECO Engineered Systems, Inc.
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

<PAGE>

Bangor Punta Corporation, and former Chairman and Chief
Executive Officer of National Securities & Research
Corporation. Since October 1993, Trustee of the Northstar
affiliated investment companies.

*MARK L. LIPSON, Trustee and President. Age: 47. Director,
Chairman and Chief Executive Officer of Northstar and Northstar,
Inc. Director and President of Northstar Administrators
Corporation and Director and Chairman of Northstar Distributors,
Inc., President and Trustee of the Northstar affiliated investment
companies since October 1993. 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.

*JOHN G. TURNER, Trustee. Age: 57. Since May 1993, Chairman
and CEO of ReliaStar Financial Corporation and Northwestern
National Life Insurance Co. and Chairman of other ReliaStar
Affiliated Insurance Companies since 1995. Since October 1993,
Director of Northstar and affiliates. Prior to May 1993,
President and CEO of ReliaStar and Northwestern National.

ALAN L. GOSULE, Trustee. Age: 55. Partner, Rogers & Wells.
Director, F.L. Putnam Investment Management Co., Inc.

DAVID W.C. PUTNAM, Trustee. Age: 67. President, Clerk and
Director of F.L. Putnam Securities Company, Incorporated, F.L.
Putnam Investment Management Company, Incorporated, Interstate
Power Company, Inc., Trust Realty Corp. and Bow Ridge Mining Co.;
Director of Anchor Investment Management Corporation; 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. Age: 73. From 1970-1991, Financial
Vice President of Boston College ; President of New England
Fiduciary Company (financial planning) since 1991; Chairman of
Massachusetts Educational Financing Authority since 1987; Vice
Chairman of Massachusetts Health and Education Authority.

WALTER H. MAY, Trustee. Age: 60. Retired. Former Senior
Executive for Piper Jaffrey, Inc.

THOMAS OLE DIAL, Vice President. Age: 40. Executive Vice
President and Chief Investment Officer - Fixed Income of
Northstar and Principal, T.D. & Associates, Inc. From 1989 to
August 1993, Executive Vice President and Chief Investment Officer
- Fixed Income of National Securities and Research
Corporation, Vice President of National Affiliated
Investment Companies, and Vice President of NSR Asset Management
Corporation. From 1988 to 1989, President of Dial
Captial Management.

<PAGE>

MARGARET D. PATEL, Vice President. Age: 52. Vice President and
Managing Director of Northstar. From 1988 to May 1995,
Senior Vice President of BSC. From 1986 to 1988,
President and Portfolio Manager at Fixed Income Asset Management,
Inc. Prior to 1988, Portfolio Manager at American Capital and
The Dreyfus Corporation.

GEOFFREY WADSWORTH, Vice President. Age: 53. Vice President of
Northstar. Former Vice President and Portfolio Manager with
National Securities & Research Corporation.

AGNES MULLADY, Vice President and Treasurer. Age: 38. Senior
Vice President and Chief Financial Officer of Northstar, Senior
Vice President and Treasurer of Northstar Administrators
corporation, and Vice President and Treasurer of Northstar
Distributors, Inc. From 1987 to 1993, Vice President and
Treasurer of National Securities & Research Corporation.

*Deemed to be an "interested person" of the Trust, as defined by the 1940 Act.

Northstar and Northstar Administrators Corporation make their personnel
available to serve as Officers and "Interested Trustees" of the Funds.
All Officers and Interested Trustees of the Funds are compensated by
Northstar or Northstar Administrators Corporation. Trustees who are not
"interested persons" of the Adviser are paid an annual retainer fee of
$6,000 for their combined services as Trustees to the Funds and to
retail funds sponsored or advised by the Adviser, and a per meeting fee
of $1,500 for attendance at each joint meeting of the Funds and the
other Northstar retail funds. The Funds also reimburse Trustees for
expenses incurred by them in connection with such meetings.

Mone Anathan, III, Dr. Loring E. Hart, Reverend Bartley MacPhaidin and
Edward T. Sullivan, each of whom were previously Trustees of the Funds,
serve on an Advisory Board. The Advisory Board is expected to provide
advice to the Board of Trustees in order to facilitate a smooth
management transition regarding the advisory services to be provided by
Northstar and to provide such other advise as the Board of Trustees may
request from time to time. The Advisory Board will have no authority or
control over the Funds. Northstar has agreed to assume all expenses
associated with the Advisory Board for three years.

As of August 31, 1996, all Trustees and executive officers of each Fund
as a group owned beneficially or of record less than 1% of the
outstanding securities of such Fund. To the knowledge of the Funds, as
of August 31, 1996, no shareholder owned beneficially (b) or of record
(r) more than 5% of a Fund's outstanding shares, except as set forth
below:

(1) Income and Growth Fund

Merrill Lynch Pierce Fenner & Smith 12.4%(r)
Jacksonville, Florida

<PAGE>

Norwest Bank 11.6%(r)
Minneapolis, Minnesota

(2) High Total Return Fund

Merrill Lynch Pierce Fenner & Smith 25.6%(r)
Jacksonville, Florida

(3) Special Fund

Merrill Lynch Pierce Fenner & Smith 41.6%(r)
Jacksonville, Fla.

(4) Growth Fund

Merrill Lynch Pierce Fenner & Smith 13.8%(r)
Jacksonville, Fla.

(5) Balance Sheet Opportunities Fund

Merrill Lynch Pierce Fenner & Smith 8.7%(r)
Jacksonville, Fla.

(6) Government Securities Fund

Merrill Lynch Pierce Fenner & Smith 13%(r)
Jacksonville, Fla.

Order of St. Benedict of New Jersey 6%(b)
Morristown, NJ

Donaldson Lufkin Jenrette 11%(r)
Jersey City, NJ

Donaldson Lufkin Jenrette 10.3%(r)
Jersey City, NJ

<PAGE>

Donaldson Lufkin Jenrette 10.7%(r)
Jersey City, NJ

Donaldson Lufkin Jenrette 10.5%(r)
Jersey City, NJ

(7) Strategic Income Fund

Merrill Lynch Pierce Fenner & Smith 19.6% (r)
Jacksonville, Florida

Norwest Bank 8.9% (r)
Minneapolis, Minnesota

Northern Life Insurance Company 11.5% (r)
Minneapolis, MN

(8) High Yield Fund

Merrill Lynch Pierce Fenner & Smith 38.6% (r)
Jacksonville, Fla.

<PAGE>

COMPENSATION TABLE

PERIOD ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
Pension Benefits Estimated Annual Total Compensation
Compensation from Accrued as Part of Benefits upon from All Funds in
Fund Fund Expenses Retirement Northstar Complex(b)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr. (a) 0 0 13,750
Paul S. Doherty (a) 0 0 15,250
David W. Wallace (a) 0 0 15,250
Mark L. Lipson (a) 0 0 0
John G. Turner (a) 0 0 0
Alan L. Gosule (a) 0 0 14,950
David W.C. Putnam (a) 0 0 22,750
John R. Smith (a) 0 0 15,350

</TABLE>

(a) See table below for Fund specific compensation.

(b) Compensation paid by the Northstar Trust funds, the
Northstar Variable Trust funds and the remaining six funds, Northstar
Special, Growth, Balance Sheet Opportunities, Government Securities,
Strategic Income and High Yield Funds, formerly advised by BSC.

INDIVIDUAL FUND

FISCAL YEAR COMPENSATION TABLES

<TABLE>
<CAPTION>
Income and Growth High Total Return Special(c) Growth(c)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr. 2,043 2,043 708 708

Paul S. Doherty 2,043 2,043 2,208 708

David W. Wallace 2,043 2,043 2,208 708

Mark L. Lipson 0 0 0 0

John G. Turner 0 0 0 0

Alan L. Gosule 708 708 3,409 1,909

David W.C. Putnam 708 708 3,366 2,985

John R. Smith 833 833 3,433 1,934

</TABLE>

<PAGE>

Balance Sheet Government Strategic Income(c) High Yield(c)
Opportunities(c) Securities(c)
<S> <C> <C> <C> <C>
Robert B. Goode, Jr. 708 708 708 708

Paul S. Doherty 708 708 708 708

David W. Wallace 708 708 708 708

Mark L. Lipson 0 0 0 0

John G. Turner 0 0 0 0

Alan L. Gosule 1,908 1,908 1,908 1,908

David W.C. Putnam 2,906 5,258 4,775 1,460

John R. Smith 1,933 1,933 1,933 1,933
</TABLE>

(c) Prior to June 2, 1995 the Trustees who were not interested
persons, other than David Putnam, were paid a per fund fee of $500 for
each full calendar year during which services were rendered to the
Funds. In addition, they were paid a per fund fee of $250 for attending
each of the Trustees' meetings, $100 per fund for attending each audit
committee meeting, $100 audit committee retainer per fund and were
reimbursed for out-of-pocket expenses. Mr. Putnam, former Chairman of
these Funds, received a fee of $30,000 per annum.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. has been selected as the independent
accountants of the Northstar Trust and each of the remaining Northstar
Funds. Coopers & Lybrand L.L.P. audits the Funds' annual financial
statements and expresses an opinion thereon.

CUSTODIAN

Custodial Trust Company, Princeton, New Jersey, acts as custodian for
the Income and Growth and High Total Return Funds, and First Data
Investor Services Group, Inc. ("First Data"), Boston, Massachusetts,
serves as fund accounting agent for these Funds; State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, acts as
custodian, and fund accounting agent for the remaining Funds.

TRANSFER AGENT

Pursuant to a Transfer Agency Agreement with each Fund, First Data (the
"Transfer Agent") acts as the Transfer Agent for each Fund. Pursuant to
a Sub-Transfer Agency Agreement between Advest Transfer Services, Inc.
("ATS") and First Data, ATS serves as the sub-transfer agent for the
Funds offering Class T shares, and, prior to June 5, 1995, ATS acted as
transfer agent to these Funds.

<PAGE>

REPORTS TO SHAREHOLDERS

The fiscal year of the Northstar Trust ends on October 31. The fiscal
year of each other Fund ends on December 31. Each 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.

ORGANIZATIONAL AND RELATED
INFORMATION

Special Fund (formerly The Advantage Special Fund) was organized in
1986; Growth Fund (formerly The Advantage Growth Fund) was organized in
1986; Balance Sheet Opportunities Fund (formerly The Advantage Income
Fund) was organized in 1986; Government Securities Fund (formerly The
Advantage Government Securities Fund) was organized in 1986; Strategic
Income Fund (formerly The Advantage Strategic Income Fund) was organized
in 1994; and High Yield Fund (formerly The Advantage High Yield Bond
Fund) was organized 1989. Northstar Trust (formerly Northstar Advantage
Trust), and two of its series Income and Growth Fund (formerly Northstar
Advantage Income and Growth Fund) and High Total Return Fund (formerly
Northstar Advantage High Total Return Fund), was organized in 1993.
Northstar Growth + Value Fund was organized in 1996.

The shares of each 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 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 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 of the affected Fund or class 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, there is a remote possibility that shareholders
of a business trust could, under certain circumstances, be held
personally liable as partners for the obligations of such trust. The
Amended and Restated Declaration of Trust for each Fund contains
provisions intended to limit such liability and to provide
indemnification out of Fund property of any shareholder charged or held
personally liable for obligations or liabilities of a Fund solely by
reason of being or having been a shareholder of a Fund and not because
of such shareholder's acts or omissions or for some other reason. Thus,
the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a Fund itself
would be unable to meet its obligations.

<PAGE>

PERFORMANCE INFORMATION

Performance information for the Funds may be compared in reports and
promotional literature to (1) the S&P 500, Dow Jones Industrial Average
("DJIA"), or other unmanaged indices, so that investors may compare each
Fund's results to those of a group of unmanaged securities that are
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 that
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; (iii)
the Consumer Price Index (measure for inflation) to assess the real rate
of return from an investment in a Fund; and (iv) well known monitoring
sources of CD performance rates, such as Solomon Brothers, Federal
Reserve Bulletin, American Bankers and 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. Performance rankings are based on historical
information and are not intended to indicate future performance.

In addition, the Funds may, from time to time, include various measures
of a Fund's performance, including the current yield, the tax-equivalent
yield and the average annual total return of shares of the Funds in
advertisements, promotional literature or reports to shareholders or
prospective investors. Such materials may occasionally cite statistics
to reflect a Fund's volatility risk.

AVERAGE ANNUAL TOTAL RETURN. Standardized quotations of average annual
total return ("Standardized Return") for each class of shares will be
expressed in terms of the average annual compounded rate of return for a
hypothetical investment in such class of shares over periods of 1, 5 and
10 years or up to the life of the class of shares, calculated for each
class separately 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 a proportional share
of each Class's expenses (on an annual basis), the deduction of the
maximum initial sales load (in the case of Class A shares) and the
maximum contingent deferred sales charge applicable to a complete
redemption of the

<PAGE>

investment (in the case of Class B, Class C and Class
T shares), and assume that all dividends and distributions are
reinvested when paid.

YIELD. Quotations of yield for a specific class of shares of a Fund will be
based on all investment income attributable to that class earned during a
particular 30-day (or one month) period (including dividends and interest), less
expenses accrued during the period ("net investment income"), and will be
computed by dividing the net investment income per share of that class earned
during the period by the maximum offering price per share on the last day of the
month, according to the following formula:

Yield = 2[(a-b + 1) TO THE POWER OF 6 -1]

------------------------------
cd

Where:

a = dividends and interest earned during the period
attributable to a specific class of shares

b = expenses accrued for the period attributable to that class
(net of reimbursements)

c = the average daily number of shares of that class
outstanding during the period that were entitled to
receive dividends, and

d = the maximum offering price per share on the last day of
the period

The maximum offering price includes a maximum contingent deferred sales
load of 4%, in the case of Class T shares, 5% for Class B shares, and
1%, for Class C shares.

All accrued expenses are taken into account as follows. Accrued expenses
include all recurring expenses that are charged to all shareholder
accounts in proportion to the length of the base period, including but
not limited to expenses under the Funds' distribution plans. Except as
noted, the performance results take the contingent deferred sales load
into account.

The yield for Class A, B, C and T shares of the Special Fund, Growth
Fund Balance Sheet Opportunities Fund, Government Securities Fund,
Strategic Income Fund, and High Yield Fund for the month ended December
31, 1995, and the yield for Class A, B and C of the Income and Growth
Fund and High Total Return Fund for the month ended April 30, 1995 was
as follows:

YIELD

FUND CLASS A CLASS B CLASS C CLASS T

Special Fund (0.50)% (1.20)% (1.21)% (1.15)%
Growth Fund 0.06 % (0.57)% (0.61)% (0.40)%

<PAGE>

Balance Sheet Opportunities
Fund 2.75% 2.25% 1.77% 2.63%
Government Securities Fund 6.03% 5.63% 5.52% 6.08%
Strategic Income Fund 8.08% 7.81% 7.81% 8.11%
High Yield Fund 8.95% 8.74% 8.74% 9.22%
Income and Growth 9.59% 9.41% 9.38% N/A
High Total Return Fund 2.97% 2.40% 2.45% N/A

Non-Standardized Return. In addition to the performance information
described above, the Funds may provide total return information that is
not calculated according to the formula set forth above
("Non-Standardized Return"). Neither initial nor contingent deferred
sales charges are taken into account in calculating Non-Standardized
Return. Excluding a Fund's sales charge from a total return calculation
produces a higher total return figure.

The following table summarizes the calculation of Standardized and Non-
Standardized Return for Class A, Class B and Class C shares of each Fund
in the Northstar Trust and for Class A, Class B, Class C and Class T
shares of the other Funds for the periods indicated.

NORTHSTAR TRUST. The following table summarizes the calculation of Total
Return for the periods indicated through October 31, 1995, assuming the
contingent deferred sales load HAS been assessed.

ONE YEAR SINCE INCEPTION*

INCOME AND GROWTH FUND

Class A 6.93% 4.68%
Class B 6.41% 1.57%
Class C 10.43% 5.79%

HIGH TOTAL RETURN FUND

Class A 7.66% 2.14%
Class B 6.97% (1.05)%
Class C 11.44% 2.38%

The following table summarizes the calculation of Total Return for the
periods indicated through October 31, 1995, assuming the contingent
deferred sales load HAS NOT been assessed.

ONE YEAR SINCE INCEPTION*

INCOME AND GROWTH FUND

<PAGE>

Class A 13.19% 7.29%
Class B 12.31% 3.84%
Class C 12.33% 5.79%

HIGH TOTAL RETURN FUND

Class A 13.02% 4.68%
Class B 11.97% 0.94%
Class C 12.44% 2.38%

* The inception date for Class A, Class B and Class C shares of Income
and Growth Fund and High Total Return Fund is November 8, 1993,
February 9, 1994 and March 21, 1994, respectively.

THE REMAINING FUNDS. The following table summarizes the calculation of
Total Return for Class T shares of the remaining Funds for the periods
indicated through December 31, 1995, assuming the maximum sales charge
HAS been assessed.

SINCE
ONE YEAR FIVE YEARS INCEPTION*

Special Fund 7.34% 129.28% 143.95%
Growth Fund 20.46% 89.16% 183.42%
Balance Sheet Fund 21.11% 76.92% 149.45%
Government Securities Fund 18.90% 65.37% 113.54%
Strategic Income Fund 10.54% N/A 13.99%
High Yield Fund 9.71% 147.14% 92.51%

The following table summarizes the calculation of Total Return for Class
T shares of the remaining Funds for the periods indicated through
December 31, 1995, assuming the maximum sales charge HAS NOT been
assessed.

SINCE
ONE YEAR FIVE YEARS INCEPTION*

Special Fund 11.34% 129.28% 143.95%
Growth Fund 24.40% 89.16% 183.42%
Balance Sheet Fund 25.11% 76.92% 149.45%
Government Securities Fund 22.9% 65.37% 113.54%
Strategic Income Fund 12.39% N/A 16.99%
High Yield Fund 13.71% 147.14% 92.51%
- ---------------------------
51

<PAGE>

* The inception date for Class T shares of Special, Growth, Balance
Sheet Opportunities and Government Securities Funds was February 1,
1986. The inception date for Class T shares of the High Yield Fund was
July 5, 1989. The inception date for Class T shares of the Strategic
Income Fund was July 1, 1994. The following table summarizes the
calculation of Total Return for Class A, Class B and Class C shares of
the remaining Funds for the period from commencement of operations of
such classes (June 5, 1995) through December 31, 1995, assuming the
maximum sales charge HAS been assessed.

CLASS A CLASS B CLASS C

Special Fund 6.85% 6.79% 10.79%
Growth Fund 6.23% 6.86% 10.29%
Balance Sheet Fund 6.69% 6.75% 10.60%
Government Securities Fund 5.08% 4.83% 8.83%
Strategic Income Fund 1.04% 0.54% 4.47%
High Yield Fund (0.78)% (1.11)% 2.83%

The following table summarizes the calculation of Total Return for Class
A, Class B and Class C shares of the remaining Funds for the period from
commencement of operations of such classes (June 5, 1995) through
December 31, 1995, assuming the maximum sales charge HAS NOT been
assessed.

CLASS A CLASS B CLASS C

Special Fund 12.20% 11.79% 11.79%
Growth Fund 11.55% 11.27% 11.17%
Balance Sheet Fund 11.95% 11.56% 11.49%
Government Securities Fund 10.04% 9.61% 9.61%
Strategic Income Fund 6.40% 5.89% 5.81%
High Yield Fund 11.48% 4.17% 4.17%

A Fund may quote its performance in various ways, using various types of
comparisons to market indices, other funds or investment alternatives,
or to general increases in the cost of living. All performance
information supplied by the Funds in advertising is historical and is
not intended to indicate future returns. Each Fund's share prices and
total returns fluctuate in response to market conditions and other
factors, and the value of the Fund's shares when redeemed may be more or
less than their original cost.

Evaluations of Fund performance made by independent sources may also be
used in advertisements concerning the Funds, including reprints of, or
selections from, editorials or articles about a Fund. These editorials
or articles may include quotations of performance from other sources,
such as Lipper or Morningstar. Sources for Fund performance information
and

<PAGE>

articles about the Fund may include the following: BANXQUOTE, BARRON'S,
BUSINESS WEEK, CDA INVESTMENT TECHNOLOGIES, INC., CHANGING TIMES,
CONSUMER DIGEST, FINANCIAL WORLD, FORBES, FORTUNE, IBC/DONOGHUES'S MONEY
FUND REPORT, IBBOTSON ASSOCIATES, INC., INVESTMENT COMPANY DATA, INC.,
INVESTOR'S DAILY, LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND
PERFORMANCE ANALYSIS, MONEY, MUTUAL FUND VALUES, THE NEW YORK TIMES,
PERSONAL INVESTING NEWS, PERSONAL INVESTOR, SUCCESS, USA TODAY, U.S.
NEWS AND WORLD REPORT, WALL STREET JOURNAL, WIESENBERGER INVESTMENT
COMPANIES SERVICES, and WORKING WOMAN.

When comparing yield, total return and investment risk of shares of a
Fund with other investments, investors should understand that certain
other investments have different risk characteristics than an investment
in shares of the Fund. For example, certificates of deposit may have
fixed rates of return and may be insured as to principal and interest by
the FDIC, while a Fund's returns will fluctuate and its share values and
returns are not guaranteed. Money market accounts offered by banks also
may be insured by the FDIC and may offer stability of principal. U.S.
Treasury securities are guaranteed as to principal and interest by the
full faith and credit of the U.S. government. Money market mutual funds
may seek to offer a fixed price per share.

The performance of a Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance
of the Fund for any period in the future. The performance of a Fund is a
function of many factors including its earnings, expenses and number of
outstanding shares. Fluctuating market conditions; purchases, sales and
maturities of portfolio securities; sales and redemptions of shares of
beneficial interest, and changes in operating expenses are all examples
of items that can increase or decrease the Fund's performance.

FINANCIAL STATEMENTS

The Northstar Trust's audited financial statements dated October 31,
1995 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 Trust for the fiscal year ended October 31, 1995.

The audited financial statements of Special Fund, Growth Fund,
Balance Sheet Opportunities Fund, Government Securities Fund, Strategic
Income Fund and High Yield Fund as of and for the fiscal period ended
December 31, 1995 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
Advantage Family of Funds for the fiscal year ended December 31, 1995.

<PAGE>

PART C
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements: Included in Part A:
NORTHSTAR TRUST - Financial Highlights for a share outstanding throughout
the period November 8, 1993 (Class A) February 9, 1994 (Class B) and March 21,
1994 (Class C) (commencement of offering of each Class) through April 30, 1996.

SPECIAL, GROWTH, BALANCE SHEET OPPORTUNITIES AND GOVERNMENT SECURITIES
FUNDS: Financial Highlights for a share outstanding throughout the period
February 3, 1986 (commencement of operations) to June 30, 1996.

HIGH YIELD FUND: Financial Highlights for a share outstanding throughout
the period June 5, 1989 (commencement of operations) through June 30, 1996.

STRATEGIC INCOME FUND: Financial Highlights for a share outstanding
throughout the period July 1, 1994 (commencement of operations) to June 30,
1996.

Included in Part B: The audited financial statements for the year ended
October 31, 1995 for the Northstar Trust and for the year ended December 31,
1995 for the Special, Growth, Balance Sheet Opportunities, Government
Securities, Strategic Income and High Yield, and the report of the independent
accountants with respect to such financial statements are incorporated in the
Statement of Additional Information for the Trust and each Fund by reference to
the Annual Report to Shareholders for the Trust and each Fund for the fiscal
years ended October 31, 1995 and December 31, 1995, respectively. The
incorporated financial information for the years ended October 31, 1995 for the
Trust and December 31, 1995 for the other Funds includes the following:
Statement of Investments, Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets, Financial Highlights, Notes to
Financial Statements, and report of independent accountants.

The unaudited financial statements for the six months ended April 30, 1996 for
the Northstar Trust and for the six months ended June 30, 1996 for the Special,
Growth, Balance Sheet Opportunities, Government Securities, Strategic Income,
and High Yield Funds are filed herewith. The financial information for the six
months ended April 30, 1996 for the Trust and June 30, 1996 for the other Funds
includes the following: Statement of Investments, Statement of Assets and
Liabilities, Statement of Operations, Statement of Changes in Net Assets,
Financial Highlights and Notes to Financial Statements.

<PAGE>

(b) EXHIBITS - SPECIAL, GROWTH, BALANCE SHEET OPPORTUNITIES, GOVERNMENT
SECURITIES, STRATEGIC INCOME, AND HIGH YIELD FUNDS.

(1) Form of Amended and Restated Declaration of Trust (1)
(2) By-Laws (1)
(3) N/A
(4) N/A
(5) (a) Form of Investment Advisory Agreement (1)
(b) Subadvisory Agreement for Northstar Advantage Special
Fund (4)
(6) (a)-(d) Form of Underwriting Agreements for Classes A, B,
C and T Shares (1)
(e) Form of Dealer Agreement for Northstar Affiliated
Investment Cos.(1)
(f) Form of Special Dealer Agreement between Northstar
Distributors and Advest, Inc. (1)
(7) N/A
(8) Form of Custody Agreement (1)
(9) (a) Form of Transfer Agency Agreement (1)
(b) Form of Sub-Transfer Agency Agreement (1)
(c) Form of Administrative Services Agreement (1)
(d) Administration Agreement (3)
(10) N/A
(11) Consent of Independent Public Accountants*
(12) Annual Report to Shareholders (3)
(13) N/A
(14) N/A
(15) Form of Distribution Plan for Classes A, B, C and T
Shares (1)
(16) Performance Information (3)
(17) Powers of Attorney (2)
(18) Not Applicable
(27) Financial Data Schedules (EX-27)*
- ----------------------------------
NOTES TO EXHIBIT LISTING

* Filed herewith

(1). Previously filed as an Exhibit to the Registrant's Post-Effecitve
Amendment as follows and incorporated herein by reference: Government
Securities Fund - PEA No. 16; Income Fund - PEA No. 15; Growth Fund -
PEA No. 15; Special Fund - PEA No. 15; High Yield Fund - PEA No. 11;
Strategic Income Fund - PEA No. 7.

(2). The Power of Attorney executed by Walter May was filed as an Exhibit to
the Registrant's Post-Effective Amendment as follows and is
incorporated herein by reference: Government Securities Fund - PEA No.
18; Balance Sheet Opportunities Fund - PEA No. 17; Growth Fund - PEA
No. 17; Special Fund - PEA No. 17; High Yield Fund - PEA No. 13; and
Strategic Income Fund - PEA No. 9. All other powers of attorney

<PAGE>

were filed as an Exhibit to the Registrant's Post-Effective Amendment
as follows and are incorporated herein by reference: Government
Securities Fund - PEA No. 15; Balance Sheet Opportunities Fund - PEA
No. 14; Growth Fund - PEA No. 14; Special Fund - PEA No. 14; High Yield
Fund - PEA No. 10; and Strategic Income Fund - PEA No. 6.

(3). Previously filed as an Exhibit to the Registrant's Post-Effective
Amendment as follows and incorporated herein by reference: Government
Securities Fund - PEA No. 17; Balance Sheet Opportunities Fund - PEA
No. 16; Growth Fund - PEA No. 16; Special Fund - PEA No. 16; High Yield
Fund - PEA No. 12; and Strategic Income Fund - PEA 8.

(4). Previously filed as an Exhibit to the Special Fund's Post- Effective
Amendment No. 16 and incorporated herein by reference.

<PAGE>

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

There are no persons controlled by or under common control with Registrant.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

As of August 30, 1996, the Registrant had the following number of record
security holders:

<TABLE>
<CAPTION>
Title of Class Fund Number of Shareholders

<S> <C> <C> <C> <C> <C>
Shares of Income & Growth Fund (A) 1,663 (B) 3,699 (C) 1,641
Benefical High Total Return Fund (A) 5,532 (B) 12,641 (C) 1,781
Interest Special Fund (A) 4,695 (B) 9,027 (C) 2,612 (T) 3,981
Growth Fund (A) 193 (B) 666 (C) 48 (T) 6,556
Balance Sheet Opportunities (A) 92 (B) 438 (C) 29 (T) 5,033
Government Securities Fund (A) 118 (B) 529 (C) 21 (T) 6,617
Strategic Income Fund (A) 398 (B) 1,682 (C) 134 (T) 1,941
High Yield Fund (A) 652 (B) 3,848 (C) 544 (T) 8,165
</TABLE>

<PAGE>

ITEM 27. INDEMNIFICATION

Section 5.4 of Registrant's Declaration of Trust provides the following:

(a) Subject to Paragraph (c) hereof every person who is, or has been, a Trustee,
Officer, employee or agent 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, Officer, employee or agent and against amounts
paid or incurred by him in the settlement thereof in such manner, provided, that
to the extent any claim, action, suit or proceeding involves any particular
Series or Classes of Shares of the Trust or the assets or operations of one or
more Series or Classes of Shares, such indemnification shall be provided only
from the assets (or proceeds thereof or income therefrom of such one or more
Series or Classes of Shares and not from the assets (or proceeds thereof or
income therefrom) of any other Series or Class of Shares of the Trust.

(b) The words "claim", "action", "suit" or "proceeding" shall apply to all
claims, acitons, suits or proceedings ( civil, criminal, 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.

(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>

(d) 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 shich 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.

(e) 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
may be advanced by the Trust prior to final disposition therof 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, 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, 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 Acto 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 that 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.

<PAGE>

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

See "Management of the Funds" in the Prospectus and "Services of Northstar,
the Subadviser and The Administrator" and "Trustees and Officers" in the
Statement of Additional Information, each of which is included in the
Registration Statement. 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
January 31, 1994.

POSITION WITH OTHER SUBSTANTIAL
INVESTMENT BUSINESS, PROFESSION
NAME ADVISER VOCATION OR EMPLOYMENT
- --------- --------------------------- --------------------------------------------
<S> <C> <C>
John Turner Director Chairman and CEO, ReliaStar
Financial Corp. and affiliates;
Director of Northstar Affiliates;
Trustee and Chairman, Northstar
Affiliated Investment Companies.

John Flittie Director President, ReliaStar Financial Corp.
and affiliates; Director, Northstar
Affilates.

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 President Northstar Distributors, Inc.
Vice
President,
Sales &
Marketing

Thomas Ole Dial Executive Vice President, Northstar Affiliated
Vice Investment Companies, and
President - Principal, TD Associates Inc.
Chief Investment Officer
Fixed Income

Margaret Patel Vice President/ Vice President, Northstar Affiliate
Managing Director Investment Cos. Former Vice

<PAGE>

President and Portfolio Manager for
Boston Security Cousellors, Inc.

Geoffrey Wadsworth Vice President/ Vice President - Northstar Affiliated
Investments Investment Companies.
and Portfolio
Manager

Jeffrey Aurigemma Vice Vice President - Northstar Affiliated
President - Investment Companies.
Investments

Michael Graves Vice Vice President - Northstar Affiliated
President Investment Companies
Investments

Agnes Mullady Sr. Vice Vice President & Treasurer of
President Northstar Affiliates and the Northstar
and CFO Affiliated Investment Companies

Gertrude Purus Vice Vice President Northstar Distributors
President - and Northstar Administrators Corp.
Operations

Stephen Vondrak Vice Vice President - Northstar
President - Distributors, Inc., Former Regional
Sales & Marketing Marketing Manager with Roger
Engemann and Associates from
` 1991-1994.

Mark Sfarra Vice Vice President - Northstar
President - Distributors, Inc.
Marketing
</TABLE>

ITEM 29. PRINCIPAL UNDERWRITER

(a) See "Management of the Funds" and "How to Purchase Shares" in the Prospectus
and "Underwriter and Distribution Services" in the Statement of Additional
Information, both of which are included in this Post-Effective Amendment to the
Registration Statement. Unless

<PAGE>

otherwise indicated, the principal business address for each person is c/o
Northstar, Two Pickwick Plaza, Greenwich, CT 06830.

(b) (1) (2) (3)
Name and Principal Position and Offices Position and Offices
Address with Underwriter with Registrant
- ------------------ -------------------- --------------------
<S> <C> <C>
John Turner Director Trustee, Chairman
20 Washington Ave. South
Minneapolis, MN

John Flittie Director None
20 Washington Ave. South
Minneapolis, MN

Mark L. Lipson Chairman & Director Trustee and President

Robert J. Adler President None

Mark Blinder Reg. Vice President None

Richard Frances Reg. Vice President None

Daniel Leonard Reg. Vice President None

Stephen O'Brien Reg. Vice President None

David Linton Reg. Vice President None

Charles Dolce Reg. Vice President None

Hyman Glasman Reg. Vice President None

Stephen Vondrak Vice President None

Mark Sfarra Vice President None

Gertrude Purus Vice President None

Agnes Mullady Vice President Vice President
& Treasurer & Treasurer

</TABLE>

<PAGE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

Custodial Trust Company acts as Custodian and maintains the following records at
its principal office at 101 Carnegie Center, Princeton, New Jersey 08540-6231
for the Northstar Trust, and State Street Bank and Trust Co. maintains such
records as Custodian and Fund Accounting Agent for the Special, Growth, Balance
Sheet Opportunities, Government Securities, Strategic Income and High Yield
Funds:

(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) Fund Accounting Records.

First Data Investor Services Group, ("First Data") maintains the following
records at One Exchange Place, 11th Floor, Boston, Massachusetts, 02109, as
Transfer Agent and Blue Sky Administrator for the Funds; and Fund Accounting
Agent for the Northstar Trust.

(1) Shareholder Records;
(2) Share accumulation accounts: Details as to dates and number of shares
of each accumulation, price of each accumulation.
(3) Fund Accounting Records
(4) State Securities Regisitration Records

All other records required by item 30(a) are maintained at the office of the
Administrator, Two Pickwick Plaza, Greenwich, CT 06830.

ITEM 31. Management Services

Not Applicable.

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.

<PAGE>

(c) As to the Northstar Growth + Value Fund (the "Fund"), 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 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 12th
day of September, 1996.

REGISTRANT

By: MARK L. LIPSON
------------------------------
Mark L. Lipson, President

SIGNATURES TITLE DATE

JOHN G. TURNER Chairman and September 12, 1996
John G. Turner* Trustee

MARK L. LIPSON Trustee September 12, 1996
Mark L. Lipson*

JOHN R. SMITH Trustee September 12, 1996
John R. Smith*

PAUL S. DOHERTY Trustee September 12, 1996
Paul S. Doherty*

DAVID W. WALLACE Trustee September 12, 1996
David W. Wallace*

ROBERT B. GOODE, JR. Trustee September 12, 1996
Robert B. Goode, Jr.*

ALAN L. GOSULE Trustee September 12, 1996
Alan L. Gosule*

DAVID W.C. PUTNAM Trustee September 12,1996
David W.C. Putnam*

WALTER H. MAY, JR. Trustee September 12, 1996
Walter H. May, Jr.**

AGNES MULLADY Principal Financial September 12, 1996
Agnes Mullady and Accounting Officer

<PAGE>

By: AGNES MULLADY*
Agnes Mullady
Attorney-in-fact

* Executed pursuant to powers of attorney filed with Northstar Trust and
Strategic Income Fund - PEA No. 6; Northstar Government Securities Fund - PEA
No. 15; Northstar Balance Sheet Opportunities Fund - PEA No. 14; Northstar
Growth Fund - PEA No. 14; Northstar Special Fund - PEA No. 14; and Northstar
High Yield Fund - PEA No.10.

** Executed pursuant to power of attorney filed with Northstar Trust and
Strategic Income Fund - PEA No. 8; Northstar Government Securities Fund - PEA
No. 17; Northstar Balance Sheet Opportunities Fund - PEA No. 16; Northstar
Growth Fund - PEA No. 16; Northstar Special Fund - PEA No. 16; and Northstar
High Yield Fund - PEA No. 12 .

<PAGE>

INDEX TO EXHIBITS
---------------------
SPECIAL, GROWTH, BALANCE SHEET OPPORTUNITIES, STRATEGIC INCOME AND
HIGH YIELD FUNDS

Exhibit No. Under
Part C of Form N1-A Name of Exhibit Page Number Herein
- ----------------- -------------- -----------------
<S> <C> <C>
Exhibit 11 Consent of Independent
Accountants

Exhibit 27 Financial Data Schedule EX-27
</TABLE>

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in Post-Effective Amendment No. 17
to the Registration Statement of Northstar Special Fund (formerly Northstar
Advantage Special Fund) on Form N-1A of our report dated February 15, 1995 on
our audit of the financial statements and financial highlights of Northstar
Special Fund which report is included in the Annual Report to Shareholders of
the Advantage Family of Funds which is also incorporated by reference in this
Post-Effective Amendment to the Registration Statement.

We also consent to the references to our Firm in the Prospectus under the
caption "Financial Highlights" and in the Statement of Additional Information
under the captions "Independent Accountants" and "Financial Statements."

COOPERS & LYBRAND L.L.P.

New York, New York
September 13, 1996

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