NORTHSTAR ADVANTAGE TRUST, 485BPOS, 1996-02-29

NORTHSTAR ADVANTAGE TRUST
485BPOS, 1996-02-29

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<PAGE>

File No. 33-67852
811-7978
As filed with the Securities and Exchange Commission on February 28, 1996

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. 8

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 10

NORTHSTAR ADVANTAGE TRUST
-------------------------
(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, Connecticut 06830
------------------------------------------------
(Name and address of agent for service)

Copies of all correspondence to:
Lisa Hurley, Esq.
Northstar Investment Management Corp.
Two Pickwick Plaza
Greenwich, CT 06830

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:

immediately upon filing pursuant to paragraph (b)
----
X on February 29, 1996 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(1)
----
on [Date] 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:

this post-effective amendment designates a new effective
----
date for a previously filed post-effective amendment.
- -------------------------------------------------------------------------------
* Registrant has registered an Indefinite number of shares of beneficial
interest by its initial Registration Statement pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended, which became effective
November 5, 1993. Registrant filed the notice required by Rule 24f-2 with
respect to its most recent fiscal year on December 8, 1995.

<PAGE>

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

FORM N-1A PROSPECTUS CAPTION

1. Cover Page Cover Page

2. Synopsis Expense Information

3. Condensed Financial Financial Highlights
Information

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

5. Management of the Fund Management of the Funds

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

7. Purchases of Securities How Net Asset Value is Determined.
Being Offered How to Purchase Shares; Alternative
Sales Arrangments; 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

<PAGE>

CROSS REFERENCE SHEET
PART B

FORM N-1A CAPTION IN STATEMENT OF
ADDITIONAL INFORMATION

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information Cover Page; Other Information
& History

13. Investment Objectives Cover Page; Investment Restrictions;
& Policies Other Investment Techniques

14. Management of the Fund Trustees and Officers

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

16. Investment Advisory and Services of the Adviser and
Other Services Administrator; Other Information

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

18. Capital Stock and Other Purchases and Redemptions
Securities

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

20. Tax Status Dividends, Distributions and Taxes

21. Underwriter Underwriter and Distribution Services

22. Calculation of Performance Information
Performance Data

23. Financial Statements Financial Statements

PART C

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

<PAGE>
[LOGO]

TWO PICKWICK PLAZA (203) 863-6200
GREENWICH, CONNECTICUT, 06830 (800) 595-7827

COMBINED PROSPECTUS FEBRUARY 29, 1996

The Northstar Advantage 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 (the "Adviser") is
the investment adviser for each Fund, Northstar Distributors, Inc.
("Underwriter") is the underwriter of the Funds' shares, and Northstar
Administrators Corporation ("Northstar" or "Administrators") serves as
administrator to each Fund. Distributors and Administrators are each affiliates
of the Adviser. Navellier Fund Management, Inc. serves as subadviser for the
Northstar Advantage Special 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
February 29, 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 ADVANTAGE 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 ADVANTAGE 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 ADVANTAGE 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.

* NORTHSTAR ADVANTAGE INCOME FUND ("Income 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 ADVANTAGE 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 ADVANTAGE STRATEGIC INCOME FUND ("Strategic Income Fund")
seeks to achieve high current income by allocating its investments among the
following three 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; and
investment grade debt obligations of foreign governments, their agencies and
instrumentalities and obligations of supranational entities. The Adviser
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 ADVANTAGE 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 ADVANTAGE 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.

UNDER NORMAL MARKET CONDITIONS THE HIGH YIELD FUND AND HIGH TOTAL
RETURN FUND WILL INVEST AT LEAST 65% OF THEIR ASSETS, AND THE STRATEGIC INCOME
FUND MAY INVEST UP TO 60% (AND NO LESS THAN 20% OF ITS ASSETS) IN LOWER RATED
AND NONRATED BONDS, COMMONLY KNOWN AS "JUNK BONDS," THAT ENTAIL GREATER RISKS,
INCLUDING DEFAULT RISKS, THAN THOSE FOUND IN HIGHER RATED SECURITIES, AND ARE
CONSIDERED SPECULATIVE WITH REGARD TO PAYMENT OF INTEREST AND RETURN OF
PRINCIPAL. INVESTMENT IN THESE FUNDS MAY NOT BE APPROPRIATE FOR ALL INVESTORS.
INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING. SEE "RISK
FACTORS -- HIGH YIELD SECURITIES."

WHILE MUTUAL FUNDS OFFER SIGNIFICANT INVESTMENT OPPORTUNITIES AND ARE
PROFESSIONALLY MANAGED, THEY ALSO CARRY RISKS THAT COULD POSSIBLY RESULT IN LOSS
OF PRINCIPAL. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.

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 fees charged
directly to your individual account when you buy, sell or exchange shares.
Annual Operating Expenses are paid out of each Fund's assets and include fees
for portfolio management, maintenance of shareholder accounts, shareholder
servicing, accounting, legal and other services. Class A, Class B, and Class C
shares were first offered to investors in the Government Securities Fund, High
Yield Fund, Income Fund, Growth Fund, Special Fund and Strategic Income Fund on
June 5, 1995. Class T shares are no longer offered to new investors in these
Funds. The rules of the Securities and Exchange Commission require that maximum
sales charges be reflected in the table; however, certain investors may qualify
for reduced or no sales charges. See "How to Purchase Shares."

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

NORTHSTAR ADVANTAGE 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 % 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).............................. .45% .45% .45% .46%
Total Fund Operating Expenses................... 1.50% 2.20% 2.20% 2.16%
</TABLE>

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

NORTHSTAR ADVANTAGE 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 % 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>

2
<PAGE>
- --------------------------------------------------------------------------------

NORTHSTAR ADVANTAGE 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 % 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>

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

NORTHSTAR ADVANTAGE 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 % 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) .75%(3,4)
Other Expenses............................................ .32% .30% .26% .28%
Total Fund Operating Expenses............................. 1.27% 1.95% 1.91% 1.68%
</TABLE>

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

NORTHSTAR ADVANTAGE 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>

3
<PAGE>
- --------------------------------------------------------------------------------

NORTHSTAR ADVANTAGE 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 % 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 ADVANTAGE HIGH YIELD 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 % 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................................................................ .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>

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

NORTHSTAR ADVANTAGE 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 % 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 Fees...................................... .30% 1.00%(3) 1.00%(3)
Other Expenses.................................. .50% .50% .52%
Total Fund Operating Expenses................... 1.55% 2.25% 2.27%
<FN>
- ------------------------
(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.
</TABLE>

4
<PAGE>

<TABLE>
<S> <C>
(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 Fund would have been .48%, .47%, .43% and .58% and 1.43%,
2.12%, 2.08% and 2.18%, respectively.
</TABLE>

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 ADVANTAGE SPECIAL 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.................................. $ 62 $ 72 $ 22 $ 32 $ 22 $ 62 $ 22
3 Years................................. 93 99 69 69 69 88 68
5 Years................................. 125 138 118 118 118 116 116
10 Years................................ 218 236 236 253 253 233 233

NORTHSTAR ADVANTAGE 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 $ 71 $ 21 $ 31 $ 21 $ 60 $ 20
3 Years................................. 90 95 65 66 66 83 63
5 Years................................. 121 121 111 113 113 108 108
10 Years................................ 210 223 223 244 244 218 218
</TABLE>

<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE 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 $ 73 $ 23 $ 33 $ 23
3 years........................................... 93 100 70 69 69
5 years........................................... 126 139 119 119 119
10 years.......................................... 219 238 238 255 255
</TABLE>

<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE 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.................................. $ 60 $ 70 $ 20 $ 29 $ 19 $ 57 $ 17
3 Years................................. 86 91 61 60 60 73 53
5 Years................................. 114 125 105 103 103 91 91
10 Years................................ 194 210 210 223 223 188 188

NORTHSTAR ADVANTAGE 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 $ 67 $ 17 $ 27 $ 17 $ 53 $ 13
3 Years................................. 78 84 54 53 53 61 41
5 Years................................. 101 102 92 91 91 71 71
10 Years................................ 166 183 183 199 199 149 149
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE 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 $ 71 $ 21 $ 31 $ 21 $ 59 $ 19
3 Years................................. 89 95 65 63 63 80 60
5 Years................................. N/A N/A N/A N/A N/A N/A N/A
10 Years................................ N/A N/A N/A N/A N/A N/A N/A

NORTHSTAR ADVANTAGE 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 $ 57 $ 17 $ 27 $ 17 $ 54 $ 14
3 Years................................. 78 84 54 54 54 62 42
5 Years................................. 101 113 93 93 93 73 73
10 Years................................ 166 184 184 203 203 152 152
</TABLE>

<TABLE>
<CAPTION>
NORTHSTAR ADVANTAGE 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 $ 73 $ 23 $ 33 $ 23
3 years........................................... 94 100 70 71 71
5 years........................................... 128 140 120 121 121
10 years.......................................... 223 241 241 261 261
</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.

6
<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 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 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 Growth, Special, Income, Strategic Income, High Yield and Government
Securities Funds for the periods prior to 1995 were audited by other independent
accountants.

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

NORTHSTAR ADVANTAGE SPECIAL FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1995
---------------------------------------------
CLASS A CLASS B CLASS C CLASS T
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 19.56 $ 19.56 $ 19.56 $ 19.64
Income from investment
operations:
Net investment income
(loss)................... (0.09) (0.12) (0.15) (0.34)
Net realized and
unrealized gain (loss)... 2.48 2.43 2.46 2.57
--------- --------- --------- ---------
Total from investment
operations............... 2.39 2.31 2.31 2.23
--------- --------- --------- ---------
Less distributions:
Dividends from net
realized gain............ (1.03) (1.03) (1.03) (1.03)
--------- --------- --------- ---------
Total distributions....... (1.03) (1.03) (1.03) (1.03)
--------- --------- --------- ---------
Net Asset Value end of
period..................... $ 20.92 $ 20.84 $ 20.84 $ 20.84
--------- --------- --------- ---------
--------- --------- --------- ---------
Total Return (excluding
sales charges)(1).......... 12.20% 11.79% 11.79% 11.34%
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 2,335 $ 1,491 $ 62 $ 33,557
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets....... 1.50% 2.20% 2.20% 2.16%
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets before
waiver or
reimbursement (3)........ -- 2.21% 2.23% --
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of net investment
income to average net
assets................... (0.91)% (1.64)% (1.60)% (1.50)%
--------- --------- --------- ---------
--------- --------- --------- ---------
Portfolio Turnover Rate... 71% 71% 71% 71%
--------- --------- --------- ---------
--------- --------- --------- ---------

CLASS T SHARES
------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 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)................... (0.25) (0.32) (0.33) (0.21) (0.20) (0.06) (0.13) (0.14) (0.06)
Net realized and
unrealized gain (loss)... (0.76) 3.83 2.61 6.24 (0.83) 2.18 1.78 (0.88) (1.02)
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total from investment
operations............... (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............ (0.14) (0.12) (0.62) (0.93) -- -- -- -- --
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total distributions....... (0.14) (0.12) (0.62) (0.93) -- -- -- -- --
-------- -------- -------- ------- ------- ------- ------- ------- -------
Net Asset Value end of
period..................... $ 19.64 $ 20.79 $ 17.40 $ 15.74 $ 10.64 $ 11.67 $ 9.55 $ 7.90 $ 8.92
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total Return (excluding
sales charges)(1).......... (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).............. $ 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....... 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 (3)........ -- -- -- 3.69% 4.98% 4.89% 6.01% 4.52% 4.82%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Ratio of net investment
income to average net
assets................... (1.25)% (1.66)% (2.12)% (1.57)% (0.97)% (0.44)% (1.06)% (1.22)% (0.76)%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
Portfolio Turnover Rate... 39.43% 34.57% 39.62% 85.43% 71.79% 85.36% 39.88% 57.08% 27.86%
-------- -------- -------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- -------
</TABLE>

7
<PAGE>
- --------------------------------------------------------------------------------

NORTHSTAR ADVANTAGE GROWTH FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995
-----------------------------------------
CLASS A CLASS B CLASS C CLASS T
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 17.59 $ 17.59 $ 17.59 $ 15.75
Income from investment
operations:
Net investment income
(loss)................... 0.08 0.06 0.04 0.07
Net realized and
unrealized gain (loss)... 1.95 1.92 1.92 3.77
-------- -------- -------- --------
Total from investment
operations............... 2.03 1.98 1.96 3.84
-------- -------- -------- --------
Less distributions:
Dividends from net
investment income........ (0.10) (0.08) (0.06) (0.07)
Dividends from net
realized gain............ (3.99) (3.99) (3.99) (3.99)
Dividends from capital.... -- -- -- --
-------- -------- -------- --------
Total distributions....... (4.09) (4.07) (4.05) (4.06)
-------- -------- -------- --------
Net Asset Value end of
period..................... $ 15.53 $ 15.50 $ 15.50 $ 15.53
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (excluding
sales charges)(1).......... 11.55% 11.27% 11.17% 24.40%
-------- -------- -------- --------
-------- -------- -------- --------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 1,355 $ 1,987 $ 69 $ 76,343
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of expenses to
average net assets....... 1.42% 2.07% 2.11% 2.00%
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of net investment
income to average net
assets................... 0.63% 0.06% 0.02% 0.37%
-------- -------- -------- --------
-------- -------- -------- --------
Portfolio Turnover Rate... 134% 134% 134% 134%
-------- -------- -------- --------
-------- -------- -------- --------

CLASS T SHARES
------------------------------------------------------------------------------------------------

1994 1993 1992 1991 1990 1989 1988 1987 1986

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

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 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)................... 0.08 0.02 0.02 0.09 0.10 0.20 0.16 0.09 0.03

Net realized and
unrealized gain (loss)... (1.41) 1.67 1.30 4.62 (0.83) 2.66 1.58 (0.07) 0.87

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

Total from investment
operations............... (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........ (0.08) (0.04) (0.02) (0.08) (0.10) (0.20) (0.17) (0.08) (0.03)

Dividends from net
realized gain............ (0.15) (0.67) (1.31) (0.75) (0.51) (0.76) (0.08) -- (0.33)

Dividends from capital.... (0.02) (0.01)(2) -- -- (0.02) (0.01) -- (0.01) --

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

Total distributions....... (0.25) (0.72) (1.33) (0.83) (0.63) (0.97) (0.25) (0.09) (0.36)

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

Net Asset Value end of
period..................... $ 15.75 $ 17.33 $ 16.36 $ 16.37 $ 12.49 $ 13.85 $ 11.96 $ 10.47 $ 10.54

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

Total Return (excluding
sales charges)(1).......... (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).............. $ 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....... 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................... 0.49% 0.13% 0.09% 0.66% 0.80% 1.39% 1.40% 0.83% 0.37%

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

Portfolio Turnover Rate... 53.76% 42.27% 46.77% 63.56% 54.22% 74.56% 58.73% 54.72% 32.66%

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

</TABLE>

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

NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
1994
---------------------------------------
1995 CLASS A CLASS B CLASS C
--------------------------------------- FROM FROM FROM
CLASS A CLASS B CLASS C 11/8/93 2/9/94 3/21/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of
period........... $ 10.00 $ 9.99 $ 9.99 $ 10.00 $ 10.64 $ 10.37
Income from
investment
operations:
Net investment
income......... .35 .27 .27 0.30 0.20 0.20
Net realized and
unrealized gain
(loss)......... .84 .85 .85 (0.05) (0.65) (0.38)
----- ----- ----- ----------- ----------- -----------
Total from
investment
operations..... 1.19 1.12 1.12 0.25 (0.45) (0.18)
----- ----- ----- ----------- ----------- -----------
Less
distributions:
Dividends (from
net investment
income)........ (0.33) (0.27) (0.28) (0.25) (0.20) (0.20)
----- ----- ----- ----------- ----------- -----------
Net Asset Value
end of period.... $ 10.86 $ 10.84 $ 10.83 $ 10.00 $ 9.99 $ 9.99
----- ----- ----- ----------- ----------- -----------
----- ----- ----- ----------- ----------- -----------
Total Return
(excluding sales
charge).......... 13.19% 12.31% 12.33% 2.48% (4.20)% (1.75)%
----- ----- ----- ----------- ----------- -----------
----- ----- ----- ----------- ----------- -----------
Ratios/Supplemental
Data:
Net assets end
of period (in
thousands)..... 76,031 60,347 53,661 72,223 37,767 4,823
----- ----- ----- ----------- ----------- -----------
----- ----- ----- ----------- ----------- -----------
Ratio of
expenses to
average net
assets......... 1.51% 2.23% 2.22% 1.50% 2.20% 2.20%
----- ----- ----- ----------- ----------- -----------
----- ----- ----- ----------- ----------- -----------
Ratio of expense
reimbursement
to average net
assets......... 0% 0% 0% 0.06% 0.16% 0.47%
----- ----- ----- ----------- ----------- -----------
----- ----- ----- ----------- ----------- -----------
Ratio of net
investment
income to
average net
assets......... 3.39% 2.66% 2.67% 3.73% 3.00% 2.87%
----- ----- ----- ----------- ----------- -----------
----- ----- ----- ----------- ----------- -----------
Portfolio
Turnover
Rate........... 91% 91% 91% 26% 26% 26%
----- ----- ----- ----------- ----------- -----------
----- ----- ----- ----------- ----------- -----------
</TABLE>

8
<PAGE>
- --------------------------------------------------------------------------------

NORTHSTAR ADVANTAGE INCOME FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995
-----------------------------------------
CLASS A CLASS B CLASS C CLASS T
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 12.77 $ 12.77 $ 12.77 $ 11.54
Income from investment
operations:
Net investment income
(loss)................... 0.43 0.35 0.38 0.57
Net realized and
unrealized gain (loss)... 1.06 1.09 1.07 2.27
-------- -------- -------- --------
Total from investment
operations............... 1.49 1.44 1.45 2.84
-------- -------- -------- --------
Less distributions:
Dividends from net
investment income........ (0.48) (0.45) (0.45) (0.59)
Dividends from net
realized gain............ (1.25) (1.25) (1.25) (1.25)
Dividends from capital.... -- -- -- --
-------- -------- -------- --------
Total distributions....... (1.73) (1.70) (1.70) (1.84)
-------- -------- -------- --------
Net Asset Value end of
period..................... $ 12.53 $ 12.51 $ 12.52 $ 12.54
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (excluding
sales charges)(1).......... 11.95% 11.56% 11.49% 25.11%
-------- -------- -------- --------
-------- -------- -------- --------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 797 $ 1,759 $ 231 $ 72,472
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of expenses to
average net assets....... 1.27% 1.95% 1.91% 1.68%
-------- -------- -------- --------
-------- -------- -------- --------
Ratio of net investment
income to average net
assets................... 4.99% 4.38% 4.49% 4.44%
-------- -------- -------- --------
-------- -------- -------- --------
Portfolio Turnover Rate... 131% 131% 131% 131%
-------- -------- -------- --------
-------- -------- -------- --------

CLASS T SHARES
------------------------------------------------------------------------------------------------

1994 1993 1992 1991 1990 1989 1988 1987 1986

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

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 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)................... 0.57 0.49 0.55 0.57 0.61 0.68 0.62 0.56 0.40

Net realized and
unrealized gain (loss)... (1.25) 1.20 0.36 1.53 (0.54) 1.00 0.58 (1.04) 0.67

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

Total from investment
operations............... (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........ (0.54) (0.49) (0.52) (0.57) (0.63) (0.68) (0.60) (0.57) (0.40)

Dividends from net
realized gain............ (0.16) (0.31) -- -- -- -- -- (0.22) (0.28)

Dividends from capital.... (0.02)(2) -- -- -- (0.02) -- -- (0.01) --

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

Total distributions....... (0.72) (0.80) (0.52) (0.57) (0.65) (0.68) (0.60) (0.80) (0.68)

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

Net Asset Value end of
period..................... $ 11.54 $ 12.94 $ 12.05 $ 11.66 $ 10.13 $ 10.71 $ 9.71 $ 9.11 $ 10.39

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

Total Return (excluding
sales charges)(1).......... (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).............. $ 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....... 1.69% 1.77% 2.02% 2.06% 2.10% 2.04% 2.10% 1.98% 2.15%

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

Ratio of net investment
income to average net
assets................... 4.36% 3.99% 4.73% 5.21% 5.73% 6.38% 6.30% 5.70% 5.72%

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

Portfolio Turnover Rate... 59.26% 38.26% 58.96% 76.87% 57.39% 56.15% 24.57% 45.91% 78.71%

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

</TABLE>

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

NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1995
---------------------------------------------
CLASS A CLASS B CLASS C CLASS T
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 9.51 $ 9.51 $ 9.51 $ 8.74
Income from investment
operations:
Net investment income
(loss)................... 0.34 0.30 0.30 0.58
Net realized and
unrealized gain (loss)... 0.59 0.59 0.59 1.35
--------- --------- --------- ---------
Total from investment
operations............... 0.93 0.89 0.89 1.93
--------- --------- --------- ---------
Less distributions:
Dividends from net
investment income........ (0.37) (0.33) (0.33) (0.60)
Dividends from net
realized gain............
Dividends from capital.... -- -- -- --
--------- --------- --------- ---------
Total distributions....... (0.37) (0.33) (0.33) (0.60)
--------- --------- --------- ---------
Net Asset Value end of
period..................... $ 10.07 $ 10.07 $ 10.07 $ 10.07
--------- --------- --------- ---------
--------- --------- --------- ---------
Total Return (excluding
sales charges)(1).......... 10.04% 9.61% 9.61% 22.90%
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratios/supplemental data:
Net assets end of period
(thousands).............. $ 3,235 $ 2,790 $ 8 $ 150,951
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets....... 1.02% 1.70% 1.68% 1.30%
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of expenses to
average net assets before
waiver or
reimbursement (3)........ 1.22% 1.90% 1.88% 1.50%
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of net investment
income to average net
assets................... 6.01% 5.20% 5.28% 6.23%
--------- --------- --------- ---------
--------- --------- --------- ---------
Portfolio Turnover Rate... 295% 295% 295% 295%
--------- --------- --------- ---------
--------- --------- --------- ---------

CLASS T SHARES
-----------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of
period..................... $ 10.32 $ 9.22 $ 8.99 $ 8.47 $ 8.47 $ 8.26 $ 8.80 $ 9.94 $ 10.00
Income from investment
operations:
Net investment income
(loss)................... 0.56 0.59 0.61 0.67 0.68 0.72 0.75 0.64 0.54
Net realized and
unrealized gain (loss)... (1.56) 1.09 0.23 0.52 -- 0.21 (0.48) (1.10) 0.27
--------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............... (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........ (0.57) (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....... (0.58) (0.58) (0.61) (0.67) (0.68) (0.72) (0.81) (0.68) (0.87)
--------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value end of
period..................... $ 8.74 $ 10.32 $ 9.22 $ 8.99 $ 8.47 $ 8.47 $ 8.26 $ 8.80 $ 9.94
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Total Return (excluding
sales charges)(1).......... (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).............. $ 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....... 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 (3)........ 1.49% 1.51% 1.59% 1.64% 1.63% 1.65% -- -- --
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Ratio of net investment
income to average net
assets................... 6.00% 5.83% 6.81% 7.68% 8.23% 8.57% 8.47% 7.02% 6.38%
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
Portfolio Turnover Rate... 314.91% 81.41% 120.08% 87.00% 16.77% 73.94% 494.05% 412.29% 241.73%
--------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>

9
<PAGE>
- --------------------------------------------------------------------------------

NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1994
-------
1995 CLASS T
------------------------------------- FROM
CLASS A CLASS B CLASS C CLASS T 7/1/94
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value beginning of period.......... $12.24 $12.24 $12.24 $11.71 $12.00
Income from investment operations:
Net investment income (loss)............... 0.63 0.55 0.55 0.98 0.51
Net realized and unrealized gain (loss).... 0.13 0.15 0.14 0.66 (0.25)
------- ------- ------- ------- -------
Total from investment operations........... 0.76 0.70 0.69 1.64 0.26
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income....... (0.60) (0.55) (0.55) (0.96) (0.49)
Dividends from net realized gain........... -- -- -- -- (0.05)
Dividends from capital..................... -- -- -- -- (0.01)(2)
------- ------- ------- ------- -------
Total distributions........................ (0.60) (0.55) (0.55) (0.96) (0.55)
------- ------- ------- ------- -------
Net Asset Value end of period................ $12.40 $12.39 $12.38 $12.39 $11.71
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total Return (excluding sales charges)(1).... 6.40% 5.89% 5.81% 14.54% 2.14%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratios/supplemental data:
Net assets end of period (thousands)....... $21,790 $22,143 $2,172 $30,228 $25,252
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratio of expenses to average net assets.... 1.36% 2.06% 2.02% 1.90% 1.90%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratio of expenses to average net assets
before waiver or reimbursement (3)........ 1.43% 2.12% 2.08% 2.18% 2.53%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratio of net investment income to average
net assets................................ 7.03% 6.47% 6.48% 6.86% 7.92%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Portfolio Turnover Rate.................... 153% 153% 153% 153% 156%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>

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

NORTHSTAR ADVANTAGE HIGH YIELD FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------------------
1995 CLASS T SHARES
----------------------------------------- ------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS T 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of
period........... $ 8.68 $ 8.68 $ 8.68 $ 8.29 $ 9.31 $ 9.09 $ 7.94 $ 6.27 $ 8.55 $ 10.00
Income from
investment
operations:
Net investment
income
(loss)......... 0.48 0.44 0.44 0.84 0.81 0.85 0.92 1.08 1.12 0.60
Net realized and
unrealized gain
(loss)......... (0.10) (0.09) (0.09) 0.26 (0.99) 0.80 1.19 1.67 (2.30) (1.45)
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Total from
investment
operations..... 0.38 0.35 0.35 1.10 (0.18) 1.65 2.11 2.75 (1.18) (0.85)
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Less
distributions:
Dividends from
net investment
income......... (0.50) (0.46) (0.46) (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... (0.50) (0.46) (0.46) (0.83) (0.84) (1.43) (0.96) (1.08) (1.10) (0.60)
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Net Asset Value
end of period.... $ 8.56 $ 8.57 $ 8.57 $ 8.56 $ 8.29 $ 9.31 $ 9.09 $ 7.94 $ 6.27 $ 8.55
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Total Return
(excluding sales
charges)(1)...... 4.48% 4.17% 4.17% 13.71% (2.18)% 18.89% 27.57% 46.49% (14.59)% (8.81)%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Ratios/supplemental
data:
Net assets end
of period
(thousands).... $ 7,466 $ 79,063 $ 3,410 $139,711 $ 136,426 $ 125,095 $ 64,063 $ 25,651 $ 11,342 $ 11,045
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Ratio of
expenses to
average net
assets......... 1.02% 1.71% 1.72% 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 (3)... -- -- -- -- -- -- 1.55% 1.96% 2.25% 2.65%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Ratio of net
investment
income to
average net
assets......... 9.83% 9.18% 9.29% 9.69% 9.08% 8.84% 10.30% 14.84% 15.15% 11.44%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
Portfolio
Turnover
Rate........... 103% 103% 103% 103% 86.20% 176.40% 121.51% 57.48% 156.23% 39.63%
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
-------- -------- -------- -------- --------- --------- -------- -------- -------- ---------
</TABLE>

10
<PAGE>
- --------------------------------------------------------------------------------

NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------------
1994
----------------------------
1995 CLASS A CLASS B CLASS C
--------------------------- FROM FROM FROM
CLASS A CLASS B CLASS C 11/8/93 2/9/94 3/21/94
------- ------- ------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value beginning of period..... $ 4.41 $ 4.41 $ 4.41 $ 5.00 $ 5.20 $ 5.06
Income from investment operations:
Net investment income (loss).......... .48 .45 .44 0.41 0.33 0.26
Net realized and unrealized gain
(loss)............................... .07 .06 .09 (0.60) (0.80) (0.65)
------- ------- ------- ------ ------ ------
Total from investment operations...... .55 .51 .53 (0.19) (0.47) (0.39)
------- ------- ------- ------ ------ ------
Less distributions:
Dividends (from net investment
income).............................. (0.48) (0.45) (0.45) (0.40) (0.32) (0.26)
------- ------- ------- ------ ------ ------
Net Asset Value end of period........... $ 4.48 $ 4.47 $ 4.49 $ 4.41 $ 4.41 $ 4.41
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Total Return (excluding sales charge)... 13.02% 11.97% 12.44% (4.11)% (9.30)% (7.21)%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratios/Supplemental Data:
Net assets end of period (in
thousands)........................... 88,552 96,362 11,011 50,797 25,880 2,330
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratio of expenses to average net
assets............................... 1.55% 2.25% 2.27% 1.50% 2.20% 2.20%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratio of expense reimbursement to
average net assets................... 0% 0% 0% 0.11% 0.20% 0.99%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Ratio of net investment income to
average net assets................... 10.90% 10.20% 10.18% 10.09% 9.72% 9.46%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
Portfolio Turnover Rate............... 145% 145% 145% 163% 163% 163%
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
<FN>
- ------------------------------
(1) Total returns for 1986 for the Government Securities, Growth, Income, and
Special Funds (1989 for the High Yield Fund and 1994 for Strategic Income
Fund) represent actual, not annualized, percentages. Unaudited prior to
1992.

(2) Represents distribution in excess of net investment income due to
differences in book and tax income.

(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
High Yield, Special and Strategic Income Funds, had the former Adviser or
its affiliates not reimbursed such Funds for a portion of their expenses.
</TABLE>

11
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
- ----------------------------------------------------------------------
Each Fund has its own investment objective and policies, and each utilizes
specific investment techniques to achieve its objective. Each of the Funds is
diversified, which is a means of reducing risk by investing the Fund's assets in
a broad range of securities designed to meet the Fund's objectives. The
objectives and policies of each Fund can be expected to affect the investment
return of such Fund and the degree of market and financial risk to which such
Fund is exposed. The percentage limitations included in these policies apply
only at the time of purchase. Policies and objectives that are noted as
"fundamental" cannot be changed without a shareholder vote. All other policies,
including the investment objective for each Fund other than the Income and
Growth Fund and High Total Return Fund are not fundamental and may be changed by
the Fund's Trustees without shareholder approval. Shareholders of those Funds
will be notified at least thirty days in advance of a change in the investment
objective of a Fund, and will be notified of any other material changes. If
there is a change to a Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current financial goals. Shareholders may incur a contingent deferred sales
charge if shares are redeemed in response to a change in objective. There can,
of course, be no guarantee that the investment objective of any of the Funds
will be achieved, due to the uncertainty inherent in all investments.

NORTHSTAR ADVANTAGE SPECIAL FUND. The Fund's investment objective is capital
appreciation. The Fund invests in a diversified portfolio of equity securities
selected on the basis of their potential for growth. The Fund invests in equity
securities of companies which are listed on domestic securities exchanges or are
traded in the over-the-counter markets. However, the Fund may, to a limited
extent, invest in securities traded in markets outside the U.S. Securities
purchased by the Fund are primarily issues of smaller, lesser-known companies.
While the Fund does not limit itself to smaller companies, many of its
investments are in small, emerging growth companies. Small companies are those,
for example, with annual revenues of less than $500 million. 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 certain special risks. Such companies often have limited product lines,
markets or financial resources and depend heavily on a small management group.
Their securities may trade less frequently, in smaller volumes, and fluctuate
more sharply in value than exchange listed securities of larger companies.

Equity securities in which the Fund may invest consist of 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 "Risk
Factors -- Foreign Investments."

NORTHSTAR ADVANTAGE GROWTH FUND. The Fund's investment objective is long-term
growth of capital. Under normal conditions, at least 65% of the Fund's total
assets will be invested in securities purchased for their prospects for capital
appreciation. The Fund invests principally in common stocks of companies which
are listed on the domestic securities exchanges or are traded in the domestic
over-the-counter markets, but may, to a limited extent, invest in securities
traded in markets outside the U.S. The Fund also may invest in preferred stocks
and convertible securities issued by such companies.

The Fund invests in industries and companies which, in the opinion of the
Adviser, have potential for capital growth and selects securities of companies
with records of above-average earnings growth or companies which, in its view,
are substantially undervalued in relation to assets. Some of the equity
securities in which the Fund invests may be speculative and involve substantial
risk, since they may experience significant price fluctuations in both rising
and declining markets. 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 "Risk Factors --
Foreign Investments."

NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND. The Fund's investment objective
is to seek current income balanced with the objective of achieving capital
appreciation. Under normal market conditions, the Fund will invest at least 65%
of its total assets in income-producing securities. In seeking to achieve its
objective, the Fund will invest in equity securities of domestic and foreign
issuers that have prospects for dividend income and growth of capital,
convertible securities, and selected debt securities of domestic and foreign
private and government issuers. These debt securities would include U.S.
Government obligations, foreign and domestic investment grade bonds, and bonds
issued by foreign governments considered stable by the Adviser and supported
through the authority to levy taxes by national state or provincial governments
or similar political subdivisions. The proportion of holdings in

12
<PAGE>

common stocks, preferred stocks, other equity-related securities, and debt
securities will vary in accordance with the level of return that can be achieved
from these various types of securities. Securities are also purchased on the
basis of fundamental attraction regarding capital appreciation prospects. In
this way, income is "balanced" with capital. The Fund invests in equity
securities that are listed primarily on the New York Stock Exchange or American
Stock Exchange or that are traded in the over-the-counter market. Equity and
equity-related securities purchased by the Fund will typically be of large
well-established companies, but may also include to a lesser extent small
capitalization companies selected for their growth potential. Under normal
conditions, the Fund does not intend to invest more than 30% of its assets in
convertible securities. Debt securities purchased by the Fund will only be
securities rated investment grade (I.E., in the top four rating categories of
Moodys or S&P) at the time of purchase. Securities that are in the lowest
investment grade debt category may have speculative characteristics and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than in the case of
higher grade securities. In the event that an existing holding is downgraded to
below investment grade, the Fund may nevertheless retain the security.

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 "Risk Factors -- Foreign Investments."

NORTHSTAR ADVANTAGE INCOME FUND. The Fund's primary investment objective is
income. As a secondary objective, the Fund seeks capital appreciation. The Fund
invests in debt securities and equity securities of companies which are listed
or traded on domestic securities exchanges or in the over-the-counter market,
but may to a limited extent, invest in securities traded in markets outside the
U.S. 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 below investment grade (i.e. rated
lower than Baa by Moody's or BBB by S&P), or which are not rated, but normally
will not invest in securities rated below B by Moody's or S&P. These securities
are considered speculative investments and generally involve greater risk,
including the risk of loss of income and principal, than higher-rated
securities. In addition, the yield and price of a lower-rated security may tend
to fluctuate more than the yield and price of a higher-rated security.
Investment in these securities involves special risks outlined below under the
heading "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 that 10% of which may be invested in issuers that are not listed on a U.S.
securities exchange. See "Risk Factors -- Foreign Investments."

Equity securities include common and preferred stocks, warrants or rights to
purchase such stock, and securities convertible into such stock. Debt securities
may be of any maturity and pay fixed, floating or adjustable interest rates. The
Fund also may invest in discount obligations, including zero coupon securities,
that 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). The values of
debt securities generally fluctuate inversely with changes in interest rates.
This is less likely to be true for adjustable or floating rate securities, since
interest rate changes are more likely to be reflected in changes in the rates
paid on the securities. However, reductions in interest rates also may translate
into lower distributions paid by the Fund. Additionally, because zero coupon and
pay-in-kind securities do not pay interest but the Fund nevertheless must accrue
and distribute the income deemed to be earned on a current basis, the Fund may
have to sell other investments to raise the cash needed to make income
distributions.

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

U.S. Government Securities include U.S. Treasury obligations and obligations
of agencies and instrumentalities of the U.S. Government. The Fund may at
various times have all or substantially all of its assets in U.S. Government
Securities issued by a single agency or instrumentality. Some U.S. Government
Securities, such as U.S. Treasury obligations, are supported by the full faith
and credit of the United States; others, such as securities of Federal Home Loan
Banks, are supported by the right of the issuer to borrow from the U.S.
Treasury; still others, such as bonds issued by the Federal National Mortgage
Association, a private corporation, are supported only by the credit of the
instrumentality. Securities of an instrumentality are not insured by the U.S.
Government and there can be no assurance that the U.S. Government will support
an instrumentality it sponsors. Because the U.S. Government is not obligated by
law to provide support to an instrumentality it sponsors, the Government
Securities Fund will invest in the securities issued by such an instrumentality
only when the Adviser determines that the credit risk with respect to the
instrumentality does not make the securities of the instrumentality unsuitable
investments. The Adviser does not intend to invest in excess of 35% of the
Fund's assets in securities not supported by the full faith and credit of the
United States, nor does it intend to invest more than 20% of the portfolio in
securities issued by any single instrumentality not supported by the full faith
and credit of the United States.

13
<PAGE>

Securities of the sort owned by the Fund generally possess a high degree of
dependability with respect to timely payment of principal and interest. However,
such securities fluctuate in market price (but not in ultimate repayment
amount), primarily with interest rate levels and trends, rising when interest
rates decline and declining when interest rates rise. Consequently, the Fund's
net asset value will fluctuate in response to changing interest rates. The Fund
may invest in U.S. Government Securities of varying maturities and duration, and
the portfolio at times may hold a significant portion of its assets in
securities with longer durations. Long duration securities have greater price
movements in response to interest rate changes than movements in shorter
duration securities and may impact the Fund's net asset value accordingly. The
Adviser's determination of average duration reflects its outlook on interest
rates as well as its determination of best relative value in making investments.
Mortgage-backed securities have yield and maturity characteristics corresponding
to the underlying mortgage loans. Fluctuating prepayments of principal may
result from the refinancing or foreclosure of the underlying mortgage loans.
Because of the prepayment risks, these securities may have less potential for
capital appreciation during periods of declining interest rates than other
investments of comparable maturities, while having a comparable risk of decline
during periods of rising interest rates.

The Fund may invest in zero coupon treasury securities which consist of
stripped interest or principal components of U.S. Treasury bonds or notes
("STRIPs"). STRIPs involve the separation of the corpus (face amount) of the
bond or note from the coupon (interest portion). The U.S. Treasury redeems the
bond or note corpus (zero coupon bond or note) for the face value thereof at
maturity and redeems the stripped coupon (interest portion) beginning at the
date specified thereon. Zero coupon Treasury securities pay no interest to
holders during their life and usually trade at a deep discount from their face
or par value. They are subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities which make periodic distributions of interest. On the other hand,
zero coupon securities eliminate reinvestment risk and lock in a rate of return
to maturity. Stripped interests in U.S. Treasury securities that are not issued
through the U.S. Treasury's STRIPs program are not considered to be U.S.
Government Securities. The Fund will accrue and distribute income from zero
coupon securities on a current basis and may have to sell securities to generate
cash for distributions.

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. To the
extent that any investment or investment practice under the Fund's investment
policies described herein or in the Statement of Additional Information are not
permissible for federal credit unions, the Fund shall refrain from purchasing
such investment or engaging in such practice. The Fund will notify shareholders
60 days before making any change to this policy. THE GOVERNMENT SECURITIES
FUND'S SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR ITS
AGENCIES OR INSTRUMENTALITIES, OR BY ANY OTHER PERSON OR ENTITY.

NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND. The Fund seeks high current
income. The Fund will, under normal market conditions, allocate its investments
among the three fixed income securities markets described below. The Adviser
believes that allocation of the Fund's investments among the three sectors will
better enable the Fund to achieve its objective and may reduce investment risk
and volatility. The Fund will, under normal market conditions, maintain at least
20% of its total assets in each of the three sectors and may not invest more
than 60% of its total assets in any one sector, and have substantially all of
the Fund's assets invested in the three market sectors. No more than 60% of the
Fund's assets may be invested in foreign issuers across all sectors. In the
past, the markets for U.S. Government Securities, high yield corporate fixed
income securities and debt securities of foreign issuers have tended to move
independently of each other and have at times moved in opposite directions.
There is no assurance that they will continue to do so in the future. The
Adviser believes that when financial markets exhibit a lack of correlation, the
ability to respond strategically to market forces by allocating the Fund's
assets among the sectors should result in lower price volatility than would be
experienced by investing exclusively in any one of the markets. See "Risk
Factors -- High Yield Securities and Foreign Investments."

The Adviser will determine the amount of assets to be allocated to each sector
based on its assessment of the maximum level of current income that can be
achieved without incurring undue risks to principal value. In making this
allocation, the Adviser 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. The Adviser will
continuously review its allocations and make adjustments as it deems
appropriate. The Fund's assets allocated to each sector will be managed in
accordance with the investment policies described below.

THE U.S. GOVERNMENT SECURITIES SECTOR. U.S. Government Securities are
considered among the most creditworthy of fixed income securities. For a
description of U.S Government Securities and their characteristics, including
mortgage-backed securities, see "Northstar Advantage Government Securities
Fund." The Fund may invest all or substantially all of this sector's assets in
U.S.

14
<PAGE>

Government Securities issued by a single agency or instrumentality. The Fund may
invest in varying maturities and may adjust the average maturity of the
investments held by the Fund from time to time based upon the Adviser's
assessment of relative yields of securities of different maturities and its
expectations of future changes in interest rates.

THE HIGH YIELD SECTOR. The High Yield sector will invest predominantly in
high yielding, higher risk, lower-rated or nonrated foreign government fixed
income securities and corporate fixed income securities traded in the U.S. high
yield corporate market. These securities are rated below investment grade (I.E.,
rated below Baa by Moody's or below BBB by S&P). 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 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 than are investments in lower
yielding, higher-rated debt instruments. Investment in these securities involves
special risks. See, "Risk Factors -- High Yield Securities" and the Appendix.

The Adviser will attempt to maximize income and reduce risk within the High
Yield sector through diversification of the sector's portfolio investments and
by credit analysis of each issuer, as well as by monitoring broad economic
trends and corporate developments. The Fund will not necessarily invest in the
highest yielding securities available if, in the Adviser's view, the differences
in yield are not sufficient to justify the accompanying higher risks, and may
invest in securities rated investment grade at the time of purchase.

The foreign government securities rated below investment grade in which the
Fund invests include securities issued or guaranteed by foreign national,
provincial, state or other governments with taxing power, or their agencies or
instrumentalities, and include securities issued by developing countries and
issuers located in developing countries. Such foreign government securities may
be denominated in U.S. dollars or other currencies. In selecting and allocating
assets among the countries in which the Fund will invest, the Adviser will
develop a long-term view of those countries and will engage in an analysis of
sovereign risk by focusing on factors such as a country's public finances,
monetary policy, external accounts, financial markets, stability of exchange
rate policy and labor conditions.

The high yield securities in which the Fund may invest will consist
predominantly of bonds, but may include to a lesser extent preferred stocks and
securities convertible into or exchangeable for equity securities, or which
carry the right, in the form of a warrant or as part of a unit with the
security, to acquire equity securities. The Fund intends to purchase such
securities for their yield characteristics rather than for the purpose of
exercising the associated rights to obtain equity securities. The Fund may
invest in debt securities of any maturity that pay fixed, floating or adjustable
interest rates. 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). The values of debt securities generally fluctuate inversely with
changes in interest rates. This is less likely to be true for adjustable or
floating rate securities, since interest rate changes are more likely to be
reflected in changes in the rates paid on the securities. However, reductions in
interest rates also may translate into lower distributions paid by the Fund.
Additionally, because zero coupon and pay-in-kind securities do not pay interest
but the Fund nevertheless must accrue and distribute the income deemed to be
earned on a current basis, the Fund may have to sell other investments to raise
the cash needed to make income distributions.

The High Yield sector may also 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 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.

The Fund's investments in loans are expected in most instances to be in the
form of loan participations and loan assignments from third parties. The Fund
may invest up to 15% of its net assets in participations, assignments and other
illiquid investments. See "Illiquid Securities." Both the government that is the
borrower on the loan and the bank selling the participation or assignment will
be considered to be the issuer of the participation or assignment, and the Fund
will acquire participations only if the lender has total assets of more than $25
billion and its senior unsecured debt is rated Baa or higher by Moody's or BBB
or higher by S&P.

15
<PAGE>

THE INTERNATIONAL SECTOR. The International Sector will invest in investment
grade (I.E . rated Baa or better by Moody's or BBB or better by S&P, or in
unrated securities that the Adviser determines to be of equivalent quality) debt
obligations, and other fixed income securities denominated in U.S. dollars and
other currencies (i) issued or guaranteed by foreign national, provincial,
state, or other governments with taxing authority, or by their agencies or
instrumentalities; and (ii) of supranational entities (described below). The
Fund may invest in any country where the Adviser believes there is the potential
for income.

Debt obligations may or may not be supported by the full faith and credit of a
foreign government. Supranational entities include international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples of supranational entities include the World Bank,
the Inter-American Development Bank and the European Bank for Reconstruction and
Development.

NORTHSTAR ADVANTAGE HIGH YIELD FUND. The investment objective of the Fund is
high current income. The Fund normally will be invested substantially in
long-term and intermediate-term fixed income securities, with emphasis on high
yield-high risk, lower-rated or nonrated corporate debt instruments of U.S. 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, "Risk Factors -- High Yield Securities" and the Appendix. The
Adviser 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 "Risk Factors -- Foreign Investments." The Fund may invest up to
25% of its assets in equity or equity-related securities, such as preferred
stocks (which may or may not have a dividend yield), convertible securities or
rights or warrants associated with debt instruments.

NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND. The investment objective of the
Fund is to seek high income. As an investment policy, the Fund, while investing
in income producing securities, will seek to maximize total return from 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
value of high yield securities (and therefore the net asset value per share of
the Fund) can be expected to increase or decrease in response to changes in
interest rates, real or perceived changes in the credit risks associated with
its portfolio investments, and other factors affecting the credit markets
generally. 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 "Risk
Factors -- Foreign Investments."

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

16
<PAGE>
rated, are of equivalent quality in the opinion of the Adviser. The Fund may
invest up to 10%, and hold up to 25%, of its assets in securities rated below
Caa in the case of 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. Investing in bankrupt and troubled companies involves special
risks. See "Risk Factors -- High Yield 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). The values of debt securities
generally fluctuate inversely with changes in interest rates. This is less
likely to be true for adjustable or floating rate securities, since interest
rate changes are more likely to be reflected in changes in the rates paid on the
securities. However, reductions in interest rates also may translate into lower
distributions paid by the Fund. Additionally, because zero coupon and
pay-in-kind securities do not pay interest but the Fund nevertheless must accrue
and distribute the income deemed to be earned on a current basis, the Fund may
have to sell other investments to raise the cash needed to make income
distributions. 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. Typically the
Fund would purchase a high yield security that is convertible or exchangeable
for equity securities, or which carries the right in the form of a warrant or as
part of a unit with the security to acquire equity securities. The Fund would
ordinarily purchase these securities for their yield characteristics or capital
appreciation potential.

RISK FACTORS

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

HIGH YIELD SECURITIES. Each of the Strategic Income Fund, High Yield Fund,
Income Fund and High Total Return Fund may invest in higher yielding securities
that carry lower investment grade ratings. These high yield high-risk securities
are rated below investment grade by the primary rating agencies (Moody's and
S&P). See the Appendix for a description of bond rating categories. The value of
lower rated securities generally is more dependent on the ability of the company
to meet interest and principal payments than is the case for higher rated
securities. Conversely, the value of higher rated securities may be more
sensitive to interest rate movements than lower rated securities. Companies
issuing high yield securities may not be as strong financially as those issuing
bonds with higher credit ratings. Investments in such companies are considered
to be more speculative than higher quality investments. In addition, the market
for lower rated securities is generally less liquid than the market for higher
rated securities, and adverse publicity and investor perceptions may also have a
greater negative impact on the market for these securities.

Companies issuing high yield bonds are more vulnerable to real or perceived
economic changes (such as rising interest rates), political changes or adverse
developments specific to the company. Adverse economic, political or other
developments may impair the company's ability to service principal and interest
obligations, to meet projected business goals and to obtain additional
financing, particularly if the company is highly leveraged. In the event of a
default, a Fund would experience a reduction of its income and could expect a
decline in the market value of the defaulted securities.

Weighted average composition of the following Funds' portfolios at the end of
their 1995 fiscal year was:

<TABLE>
<CAPTION>
STRATEGIC HIGH TOTAL
INCOME HIGH YIELD RETURN INCOME
--------------- ----------- ---------- ----------

<S> <C> <C> <C> <C>
Investment Grade....................................... --% --% % 17.7%
BB..................................................... 26.8 37.1 21.8 16.2
B...................................................... 29.5 60.2 51.3 5.0
CCC.................................................... -- 1.4 7.7
CC..................................................... -- -- --
C...................................................... -- -- --
D...................................................... -- -- --
Nonrated............................................... 4.3 1.3 15.2 4.4
U.S. Governments, equities, and other.................. 39.4 -- 4.0 56.7
------ ----------- ---------- ----------
TOTAL.................................................. 100% 100% 100% 100%
------ ----------- ---------- ----------
------ ----------- ---------- ----------
</TABLE>

This table does not reflect the current or future composition of any of the
Fund's portfolios.

17
<PAGE>
FOREIGN INVESTMENTS. Each Fund, except the U.S. Government Securities Fund,
may invest in securities of foreign issuers. Securities of some foreign
companies and governments may be traded in the U.S., but many foreign securities
are traded primarily in foreign markets. In addition to generally higher
transaction costs associated with foreign investing, risks of foreign investing
include:

CURRENCY RISKS. A Fund must buy the local currency when its buys a foreign
security, and it sells local currency when it sells the security. The value of a
foreign security held by the Fund will be affected by the value of the local
currency relative to the U.S. dollar, causing the Fund to lose money at times,
despite an increase in the value of the security.

POLITICAL AND ECONOMIC RISK. Political and economic risks may exist,
particularly in underdeveloped or developing countries which may have relatively
unstable governments and economies based on only a few industries. In some
countries, there is the risk that the government may take over the assets or
operations of a company or that the government may impose taxes or limits on the
removal of a Fund's assets from that country.

REGULATORY RISK. There is generally less government supervision of foreign
markets, and issuers are not subject to the uniform accounting, auditing and
financial reporting standards and practices applicable to domestic issuers.
There also may be less publicly available information about foreign issuers.

OTHER INVESTMENT TECHNIQUES
- ----------------------------------------------------------------------
Unless otherwise stated, each of the following strategies and techniques may
be utilized by each of the Funds. The Funds may, but do 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 the Fund's portfolio management activities while the 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, and 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. The successful use of options and futures strategies depends on the
ability of the Adviser 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.

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 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.

18
<PAGE>
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. The Adviser 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.

TEMPORARY INVESTMENTS. In periods of unusual market conditions, for temporary
and defensive purposes, when the Adviser 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.

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.

PERFORMANCE INFORMATION
- ----------------------------------------------------------------------
The Funds may, from time to time, include their yield and total returns in
advertisements or reports to shareholders or prospective investors. Both yield
and total return figures are computed separately for each class of shares of
each Fund in accordance with formulas specified by the Securities and Exchange
Commission. Both yield and total return figures are based on historical earnings
and are not intended to indicate future performance. The yield for each class of
a Fund (which shows the rate of income a Fund earned on its investment as a
percentage of a Fund's share price) will be computed by dividing (a) net
investment income over a 30-day period by (b) an average value of invested
assets (using the average number of shares entitled to receive dividends and the
maximum offering price per share or the maximum redemption price per share) at
the end of the period, as appropriate, all in accordance with applicable
regulatory requirements. Such amounts will be compounded for six months and then
annualized for a twelve-month period to derive the yield of each class.

Standardized quotations of average annual total return for each class of
shares will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in the class of shares over a period of 1, 5
and 10 years (or up to the life of the class of shares). Total return is the
percentage increase or decrease in the value of an investment over a stated
period of time. Standardized total return quotations reflect the deduction of a
proportional share of expenses (on an annual basis) of a class, deduction of the
maximum initial sales load or the maximum CDSC applicable to a complete
redemption of the investment, as appropriate, and assume that all dividends and
distributions are reinvested when paid. The Funds also may quote a supplementary
rate of total return over different periods of time or by non-standardized
means.

Performance for Class B and Class C shares typically will be less favorable
than that for Class A and Class T shares due to the higher expense ratios for
Class B and Class C shares. Performance for Class T shares will be less
favorable than Class A shares due to higher distribution and service fees. For a
complete description of the methods used to determine yield and total return for
the Funds, see the Statement of Additional Information.

19
<PAGE>
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 and approved.
In order to receive a day's price, your order must be received by 4:00 p.m. EST.
NAV fluctuates and is determined separately for each class as of the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m. EST) each day
the Exchange is open. NAV is computed by dividing the total value of a 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
payments. The NAV of a Class B, Class C or Class T 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. However, the net asset
value per share of each class will tend to converge immediately after the
payment of dividends.

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 at
amortized cost, which approximates market value. See the Statement of Additional
Information.

MANAGEMENT OF THE FUNDS
- ----------------------------------------------------------------------
THE TRUSTEES. The Trustees of each Fund ("Trustees") oversee the operations
of the Fund and perform the various duties imposed on trustees by the laws of
the Commonwealth of Massachusetts and the 1940 Act. The Trustees meet quarterly
to review the Funds' investment policies, performance, expenses and other
business affairs and elect the officers of each Fund annually. The Trustees
delegate day to day management of the Funds to the officers of the respective
Funds.

THE ADVISER AND AFFILIATED SERVICE PROVIDERS. Pursuant to an Investment
Advisory Agreement with each Fund, Northstar Investment Management Corporation
acts as the investment adviser to each Fund. In this capacity, the Adviser,
subject to the authority of the Trustees, is responsible for furnishing
continuous investment supervision to the Funds and is responsible for the
management of the Funds' portfolios. Northstar Administrators Corporation, an
affiliate of the Adviser, furnishes certain administrative, compliance and
accounting services to each Fund. Employees of the Adviser and Administrator
serve as officers of the Funds, and the Adviser provides office space for the
Funds and pays the salaries of all Fund officers and Trustees who are affiliated
with the Adviser. Northstar Distributors, Inc., also an affiliate of the
Adviser, serves as principal underwriter of the shares of each Fund, conducting
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 through
investment dealers.

The Adviser and its affiliates are indirect, majority owned subsidiaries of
ReliaStar Financial Corp. ("ReliaStar"). ReliaStar's address is 20 Washington
Avenue South, Minneapolis, MN 55401. Combined minority interests held by members
of senior management currently equal 20%. ReliaStar is a publicly traded holding
company whose subsidiaries specialize in the life and health insurance
businesses. Through Northwestern National Life Insurance Company and other
subsidiaries, ReliaStar issues and distributes individual life insurance,
annuities and mutual funds, group life and health insurance and life and health
reinsurance, and provides related investment management services. Prior to June
2, 1995, the Northstar Advantage Special, Growth, Income, High Yield, Strategic
Income and Government Securities Funds were managed by Boston Security
Counsellors, Inc. ("BSC").

The Adviser'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 0.75% on the first $250
million of each Fund's average daily net assets in the case of the Northstar
Advantage Income and Growth and High Total Return Funds, scaled down to 0.55%
for assets over $1 billion, and at the following rates for the other Northstar
Advantage Funds: Government Securities Fund -- 0.65%; High Yield Fund -- 0.45%;
Income Fund -- 0.65%; Growth Fund -- 0.75%; Special Fund -- 0.75%; Strategic
Income Fund -- 0.65% (each of which may be subject to voluntary waiver or
reimbursement by the Adviser). The investment advisory fees paid by Income and
Growth Fund, High Total Return Fund, Growth Fund and Special Fund are higher
than the fees paid by most mutual funds. The Administrator's fee is accrued
daily against the value of each Fund's net assets and is payable monthly at an
annual rate of .10% of each Fund's average daily net assets. The Administrator
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 fees from the
Special, Growth, Income, High Yield, Strategic Income and Government Securities
Funds.

20
<PAGE>

The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting brokers, the Adviser may consider research and
brokerage services furnished to it. The Adviser also advises other accounts that
may purchase and hold securities in which the Funds may invest and certain
persons affiliated with the Adviser may purchase and hold, directly or
indirectly, securities in which the Funds or other accounts invest, subject to
internal guidelines regarding conflicts of interest. In allocating trades among
accounts for which the Adviser recommends the purchase or sale of the same
security, the Adviser follows procedures designed to ensure that such trades are
executed on a basis that is fair and equitable to each account.

INVESTMENT PERSONNEL OF ADVISER. Thomas Ole Dial has served as portfolio
manager of the High Total Return Fund since its inception in November 1993, and,
since October 1995 as co-manager of the Strategic Income Fund. Mr. Dial is a
Vice President of each Fund and Executive Vice President and Chief Investment
Officer -- Fixed Income of the Adviser. Mr. Dial also serves as manager of the
Northstar High Yield Bond Fund and Northstar Multi-Sector Bond Fund, series of a
separate open-end management investment company sponsored by the Adviser. Prior
to employment by the Adviser in October 1993, Mr. Dial served as Executive Vice
President and Chief Investment Officer -- Fixed Income of National Securities &
Research Corporation, and as portfolio manager for National Bond Fund, National
Asset Reserve, and National Multi-Sector Fixed Income Fund. Prior to National,
Mr. Dial managed high yield securities portfolios through Dial Capital
Management and various financial institutions. Mr. Dial also manages investments
for T.D. Partners, a limited partnership for which the Adviser serves as
subadviser.

Ernest Mysogland has served as portfolio manager of the Income and Growth Fund
since its inception in November 1993. Mr. Mysogland is a Vice President of the
Fund and Executive Vice President and Chief Investment Officer -- Equities of
the Adviser. Mr. Mysogland also serves as manager of the Northstar Income and
Growth Fund, and prior to February 1, 1996, served as a manager of the Northstar
Growth Fund, series of a separate open-end management investment company
sponsored by the Adviser. Prior to employment by the Adviser, Mr. Mysogland
served as Senior Vice President and Chief Investment Officer -- Equities for
National Securities and Research Corporation ("National"), and was portfolio
manager for National Income and Growth Fund, National Total Return Fund, and
National Worldwide Opportunities Fund. Prior to National, Mr. Mysogland served
as an investment manager for Reinoso Asset Management, Gintel Equity Management,
L.F. Rothschild Asset Management, Wertheim Asset Management and Kemper Financial
Services.

Geoffrey Wadsworth has served as portfolio manager of the Growth Fund since
January 1996 and served as co-manager of the Income and Growth Fund from
inception through January 1996. Mr. Wadsworth is a Vice President of the Funds
and the Adviser. He was formerly a Vice President of National, serving as
portfolio manager of the National Stock Fund, and assistant manager of
National's other equity funds.

Margaret D. Patel is the portfolio manager of the Government Securities Fund
and the Income Fund. Ms. Patel is a Vice President of the Funds and of the
Adviser and, prior to June 2, 1995, was Senior Vice President of BSC. She has
been primarily responsible for the day-to-day management of the Government
Securities Fund since 1988, and of the Income Fund since October 1995.

Prescott B. Crocker, C.F.A., is the portfolio manager of the High Yield Fund
and co-manager of the Strategic Income Fund. Mr. Crocker is a Vice President of
the Funds and of the Adviser and, until June 2, 1995, was Senior Vice President
and Director of Fixed Income Investments at BSC. Prior to joining BSC in 1993,
Mr. Crocker served for eighteen years in various capacities, including Group
Head for corporate and international fixed income, at Colonial Management
Associates, Inc. He has been primarily responsible for the day-to-day management
of the High Yield Fund since December 1993, and for the Strategic Income Fund
since its inception in 1994.

SUBADVISER; INVESTMENT PERSONNEL OF SUBADVISER. Navellier Fund Management,
Inc. ("Navellier"), a registered investment adviser, serves as subadviser to the
Special Fund pursuant to a Subadvisory Agreement dated February 1, 1996, between
the Adviser and Navellier. Navellier is a newly-formed company which is
wholly-owned by Louis G. Navellier. The principal address of Navellier is 920
Incline Way, Incline Village, NV 89450. Mr. Navellier, who has managed
investments since 1986, is also the sole shareholder of two other registered
investment advisory firms which, on a combined basis, manage approximately $1.2
billion of assets for individuals, institutions and a Navellier-sponsored
open-end management investment company, the Navellier Series Fund. Louis G.
Navellier will serve as portfolio manager for the Fund, with primary
responsibility for the day-to-day investment management. For its services,
Navellier will receive a fee equal to 0.48% of the average daily net assets of
the Fund. The Adviser is responsible for overseeing the investment management
provided by Navellier, and assumes all costs and expenses of the subadvisory
arrangement.

OTHER SERVICE PROVIDERS. 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, Income, High
Yield, Strategic Income and Government Securities Funds is State Street Bank and
Trust Company, located at 225 Franklin Street, Boston, Massachusetts 02110. The
transfer agent and Blue Sky administrator

21
<PAGE>
for all Funds, and the fund accounting agent for the Income and Growth and High
Total Return Funds, is First Data Investor Services Group ("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. Eastern time 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, except 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 The Northstar Advantage Funds, c/o First Data Investor Services, 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 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 the Adviser, 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 $250,000
or more must be for Class A shares. Please consult your financial service firm.

Prior to June 5, 1995, the Growth, Special, Income, Government Securities,
High Yield and Strategic Income 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

22
<PAGE>
will be determined in the manner that results in the lowest possible rate being
charged. Accordingly, in determining whether a contingent deferred sales charge
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 Advantage 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
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 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

23
<PAGE>

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 distributions under Individual
Retirement Accounts ("IRAs") or other qualified retirement plans in connection
with a lump-sum or other form of distribution following retirement, 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 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 (d) 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.

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.

<TABLE>
<CAPTION>
% OF NET % OF AMOUNT RETAINED BY
AMOUNT OFFERING DEALERS AS A % OF
AMOUNT PURCHASED INVESTED 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.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR SINCE PURCHASE SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------------- -------------------
<S> <C>
First............................................................................................ 5%
Second........................................................................................... 4%
Third............................................................................................ 3%
Fourth........................................................................................... 2%
Fifth............................................................................................ 2%
Thereafter....................................................................................... 0%
</TABLE>

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

24
<PAGE>
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.

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

25
<PAGE>
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
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. Eastern time. 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. Eastern time. 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 the Adviser, the
Underwriter nor the Funds will be liable for any loss, damages, expense or cost
arising out of any telephone 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. 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.

26
<PAGE>
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
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
Growth Fund, Special Fund and Strategic Income Fund, 0.75% annually of the
average daily net assets of the Class T shares in the case of the Income 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.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- ----------------------------------------------------------------------
THE FOLLOWING DISCUSSION 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.

27
<PAGE>
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, and quarterly on the Income
and Growth, Growth, and Income 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.

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 Northstar Advantage Trust (the "Trust") and
each separate Fund is organized under Massachusetts law as a business trust. The
Trust was organized in 1993; the Special, Growth, Income 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.

28
<PAGE>
<TABLE>

<S><C>

[NORTHSTAR LOGO]

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 ADVANTAGE 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.

/ / INCOME FUND $ / / GROWTH FUND $ / / STRATEGIC INCOME 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*
- -----------------------------------------------------------------------------------------------------------------------------------

/ / HIGH YIELD FUND $ / / GOVERNMENT SECURITIES FUND $ / / SPECIAL 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 $ / / HIGH TOTAL RETURN FUND $ / / MONEY MARKET PORTFOLIO $
---------- ---------- ----------
Class A / / Class B / / Class C / / Class A / / Class B / / Class C / / (Money Market Account)
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*
- -----------------------------------------------------------------------------------------------------------------------------------

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

<PAGE>

------------------------------------------------------------------------------------------------------------------------------
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 Advantage Funds.

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

RIGHTS OF ACCUMULATION
If this account qualifies 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
Advantage 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 ADVANTAGE FUNDS,
C/O FIRST DATA Box 9756 Providence, RI 02940
------------------------------------------------

<PAGE>

SPECIAL ACCOUNT OPTIONS

------------------------------------------------------------------------------------------------------------------------------
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 Advantage Funds to draw monthly drafts on your bank account number_____ and use the
proceeds ($25 minimum) therefrom to purchase shares of Northstar Advantage
------------------- --------------------------
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 Advantage Funds or the
purchaser upon 30 days written notice to the other.

The Northstar Advantage 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 WITHDRAWAL 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>

<PAGE>
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.

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.

A-1
<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
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

<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Expense Information............................. 2
Financial Highlights............................ 7
Investment Objectives and Policies of the
Funds.......................................... 12
Risk Factors.................................... 17
Other Investment Techniques..................... 18
Performance Information......................... 19
How Net Asset Value is Determined............... 20
Management of the Funds......................... 20

<CAPTION>
PAGE
---
<S> <C>
How to Purchase Shares.......................... 22
Alternative Sales Arrangements.................. 22
Investor Services and Account Policies.......... 25
How to Sell Shares.............................. 27
Distribution Plans.............................. 27
Dividends, Distributions and Taxes.............. 27
General Information............................. 28
Appendix........................................ A-1
</TABLE>

<PAGE>

FEBRUARY 29, 1996

NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES FUND
NORTHSTAR ADVANTAGE STRATEGIC INCOME FUND
NORTHSTAR ADVANTAGE HIGH YIELD FUND
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
NORTHSTAR ADVANTAGE INCOME FUND
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
NORTHSTAR ADVANTAGE GROWTH FUND
NORTHSTAR ADVANTAGE SPECIAL FUND

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

STATEMENT OF ADDITIONAL INFORMATION

Northstar Advantage Government Securities Fund, Northstar Advantage
Strategic Income Fund, Northstar Advantage High Yield Fund, Northstar Advantage
High Total Return Fund, Northstar Advantage Income Fund, Northstar Advantage
Income and Growth Fund, Northstar Advantage Growth Fund and Northstar Advantage
Special Fund (the "Funds") are open-end diversified management investment
companies, each with its own investment objective(s) and specific investment
goals. Each Fund is a separate investment company, except for the Northstar
Advantage High Total Return Fund and Northstar Advantage Income and Growth Fund,
each of which is a series of Northstar Advantage Trust, which is a separate
investment company.

NORTHSTAR ADVANTAGE 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 ADVANTAGE STRATEGIC INCOME FUND ("STRATEGIC INCOME FUND") seeks to
achieve high current income by allocating its investments among the following
three 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; and
investment grade debt obligations of foreign governments, their agencies and
instrumentalities. At least 20% shall, and up to 60% of the Fund's assets
may, be invested in each sector.

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

<PAGE>

NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND ("HIGH TOTAL RETURN FUND") seeks to
achieve high income by investing primarily in high yield, lower 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.

NORTHSTAR ADVANTAGE INCOME FUND ("INCOME FUND") seeks to realize income and,
secondarily, capital appreciation through investing in a balance of debt
securities, common and preferred stocks, and securities convertible into
common stock.

NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND ("INCOME AND GROWTH FUND") seeks
current income balanced with the objective of achieving capital appreciation
through investments in a diversified group of securities selected for their
prospects of current yield and capital appreciation.

NORTHSTAR ADVANTAGE 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 ADVANTAGE 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.

There can be no assurance that a Fund will achieve its investment
objective(s). In general, the assets of each Fund are kept fully invested in
securities selected to meet the investment objective(s) of each Fund; however,
for temporary defensive purposes, any part of a Fund's assets may be held from
time to time in cash or cash equivalents. At such times when a Fund's assets
are invested for temporary defensive purposes, the Fund will not be investing in
accordance with its investment objective(s). THE HIGH TOTAL RETURN, HIGH YIELD
AND STRATEGIC INCOME FUNDS MAY NOT BE APPROPRIATE FOR ALL INVESTORS. (SEE "RISK
FACTORS" IN THE CURRENT PROSPECTUS.)

Northstar Investment Management Corporation (the "Adviser") is the
investment adviser for each Fund. Navellier Fund Management, Inc. (the
"Subadviser") is the subadviser for Special Fund. Northstar Distributors,
Inc. (the "Underwriter") is the underwriter to the Funds, and Northstar
Administrators Corporation is the Funds' administrator (the "Administrator").
The Underwriter and Administrator are affiliates of the Adviser.

This document is not the Prospectus of the Funds, but is incorporated
therein by reference and should be read in conjunction with the Prospectus,
dated February 29, 1996. Copies of the Prospectus may be obtained upon
request and without charge by contacting the Adviser at the address or phone
number above.

<PAGE>

TABLE OF CONTENTS

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Northstar Advantage Trust . . . . . . . . . . . . . . . . . . . . . . . 5
Northstar Advantage Government Securities, Strategic Income, High
Yield, Income, Growth and Special Funds . . . . . . . . . . . . . . . . 7

OTHER INVESTMENT TECHNIQUES. . . . . . . . . . . . . . . . . . . . . . . . . 9
Derivative Instruments. . . . . . . . . . . . . . . . . . . . . . . . . 9
Privately Issued Collateralized Mortgage-Backed Obligations, Interest
Obligations and Principal Obligations . . . . . . . . . . . . . . 23
Index Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Additional Investment Techniques. . . . . . . . . . . . . . . . . . . . 25

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION. . . . . . . . . . . . . . . 31

SERVICES OF THE ADVISER AND ADMINISTRATOR. . . . . . . . . . . . . . . . . . 34

NET ASSET VALUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

PURCHASES AND REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 39
How to Obtain Reduced Sales Charges on Class A Shares . . . . . . . . . 40
Rights of Accumulation . . . . . . . . . . . . . . . . . . . . . . . . 40
Letter of Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
The Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . 41
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Conversion Feature. . . . . . . . . . . . . . . . . . . . . . . . . . . 43

DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . 43

UNDERWRITER AND DISTRIBUTION SERVICES. . . . . . . . . . . . . . . . . . . . 49

TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . 60
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 60
Organizational and Related Information. . . . . . . . . . . . . . . . . 61

<PAGE>

PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Total Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Non-Standardized Total Return . . . . . . . . . . . . . . . . . . . . . 63

OTHER INFORMATION CONCERNING FUND PERFORMANCE. . . . . . . . . . . . . . . . 65

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

4
<PAGE>

INVESTMENT RESTRICTIONS

The investment objective(s) of High Total Return Fund and Income and
Growth Fund, and certain of the investment restrictions of each of the Funds
are fundamental and cannot be changed without the approval of the holders of a
majority of the Funds' outstanding voting securities (defined in the
Investment Company Act of 1940 (the "1940 Act") as the lesser of (a) more than
50% of the outstanding shares or (b) 67% or more of the shares represented at
a meeting at which more than 50% of the outstanding shares are represented).
The investment objectives of the remaining Funds and all other investment
policies or practices are considered by the Funds to be non-fundamental and,
accordingly, may be changed without shareholder approval. Shareholders will be
notified at least thirty days in advance of a change in the objective of any
Fund, and will be notified of any other material changes. If a percentage
restriction on investments or use of assets set forth below is adhered to at
the time a transaction is effected, later changes in percentage resulting from
changing market values will not be considered a deviation from this policy.

NORTHSTAR ADVANTAGE TRUST

FUNDAMENTAL INVESTMENT POLICIES. Each of these Funds may not: (i)
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 (see "Other
Investment Techniques" in the Fund's Prospectus and in this Statement of
Additional Information ("SAI")) (the deposit of assets in escrow in
connection with the writing of covered put and call options and the purchase
of securities on a when-issued or delayed delivery basis and collateral
arrangements with respect to initial or variation margin deposits for futures
contracts will not be deemed to be pledges of the Fund's assets); (ii)
underwrite the securities of others; (iii) 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); (iv) deal in commodities
or commodity contracts, except in the manner described in the current
Prospectus and SAI of the Fund; (v) make loans to other persons (but each of
these Funds may, however, lend portfolio securities, up to 33% of net assets
at the time the loan is made, to brokers or dealers of other financial
institutions not affiliated with the Fund or the Adviser, subject to
conditions established by the Adviser (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; (vi) participate in any joint trading
accounts; (vii) 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); (viii) sell short, except that these Funds may enter
into short sales against the box in the manner described in the current
Prospectus and SAI for the Fund; (ix) invest more than 25% of its assets in
any one industry or related group of industries; (x) purchase a security
(other

<PAGE>

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; or (xi) 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.

NON-FUNDAMENTAL INVESTMENT POLICIES. These policies may be changed
without shareholder approval. These Funds may not: (i) 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; (ii) 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;
(iii) 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 the Adviser who each own beneficially more than 1/2 of 1% of its
securities; (iv) make an investment for the purpose of exercising control over
management; (v) 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 (vi) invest in interests in oil, gas or
other mineral exploration development programs (including oil, gas or other
mineral leases).

These Funds, notwithstanding any other investment policy or limitation
(whether or not fundamental) set forth herein, may invest all of its assets in
the securities or beneficial interests of a singly-pooled investment fund having
substantially the same objective(s), policies and limitations as these Funds.

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 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.

6
<PAGE>

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. Any such additional
restrictions that would have a material bearing on either of these Fund's
operations will be reflected in the Prospectus or a Prospectus supplement and
may require shareholder approval. In particular, the Trust has undertaken to
South Dakota to abide by certain limitations. Specifically, for those Fund(s)
in the Northstar Advantage Trust that do not invest more than 80% of assets in
debt securities, such Fund(s) shall not have more than 10% of total assets in
restricted securities (which, for purposes hereof, shall not include 144A
securities), or more than 10% of total assets in real estate investment trusts
or investment companies. Furthermore, these Funds will not invest in real
estate or interests therein, excluding readily marketable securities, or in
commodities futures or options.

NORTHSTAR ADVANTAGE GOVERNMENT SECURITIES, STRATEGIC INCOME, HIGH YIELD, INCOME,
GROWTH AND SPECIAL FUNDS

FUNDAMENTAL INVESTMENT POLICIES. These policies, which are identical for
each of these Funds, provide that these Funds may not: (i) 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; (ii)
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; (iii) 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; (iv) 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); (v) 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; (vi) 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; and (vii) 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 margin in connection with futures contracts and related options
is not considered the issuance of senior securities.

7
<PAGE>

NON-FUNDAMENTAL INVESTMENT POLICIES. Each of these Funds has adopted
certain investment restrictions that may be changed at any time by the Trustees
without a vote of shareholders.

These non-fundamental limitations provide that these Funds may not: (i)
borrow money in excess of 5% of its total assets (taken at market value); (ii)
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); (iii) purchase more than 10% of the voting securities of any one
issuer, except U.S. Government Securities; (iv) 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; (v) 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; (vi) 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); (vii) 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; (viii) 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%); (ix) invest in securities of any issuer if any officer or
trustee of the Fund or any officer or director of the Fund's investment adviser
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; (x) 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); (xi) 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; (xii) 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; (xiii) purchase warrants if, as
a result,

<PAGE>

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 (xiv) 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.

OTHER INVESTMENT TECHNIQUES

DERIVATIVE INSTRUMENTS

OPTIONS AND FUTURES STRATEGIES. The Adviser may at times seek to hedge
against a decline in the value of securities included in a Fund's portfolio or
an increase in the price of securities that it plans to purchase for a Fund
through the writing and purchase of options and the purchase and sale of
financial futures contracts and related options. Expenses and losses incurred
as a result of such hedging strategies will reduce the current return of the
Funds employing these hedging strategies. In addition, the Adviser may seek to
increase the current return of a Fund's portfolio by writing covered call or
secured put options.

The ability of the Funds to engage in options and futures strategies
described below will depend on the availability of liquid markets in such
instruments. Accordingly, no assurances can be given that the Funds will be
able to use these instruments effectively for the purposes stated below.
Options and futures transactions will involve certain risks that are described
below under "Risk Factors in Options Transactions" and "Risks of Transactions in
Futures Contracts and Related Options." The Funds will not engage in options
and futures transactions for leveraging purposes.

WRITING COVERED OPTIONS ON SECURITIES. Each Fund may write covered call
options and secured put options on securities of the types in which it is
permitted to invest from time to time as the Adviser determines is appropriate
in seeking to attain its investment objectives. Call options written by a Fund
give the holder the right to buy the underlying security from the Fund at a
stated exercise price; put options written by a Fund give the holder the right
to sell the underlying security to the Fund at a stated price.

Each of High Total Return Fund and Income and Growth Fund will not write
call options on when-issued securities. In addition, each of High Total Return
Fund and Income and Growth Fund will not write a covered call option if, as a
result, the aggregate market value of all portfolio securities of the Fund
covering call options or subject to put options exceeds 10% of the market value
of the Fund's net assets.

9
<PAGE>

Each of the Funds may only write call options on a covered basis or for
cross-hedging purposes. A call option is covered if the Fund owns or has the
right to acquire the underlying securities subject to the call option (or
comparable securities satisfying the cover requirements of securities exchanges)
at all times during the option period. A call option is for cross-hedging
purposes if it is not covered, but is designed to provide a hedge against
another security that the Fund owns or has the right to acquire. In the case of
a call written for cross-hedging purposes or a put option, the Fund will
maintain, in a segregated account at its custodian bank, cash or short-term U.S.
Government Securities, or, in the case of the Strategic Income Fund, short-term
debt obligations, with a value equal to or greater than the Fund's obligation
under the option. Each of the Funds may also write combinations of secured puts
and covered calls on the same underlying security.

A Fund will receive a premium from writing an option, which increases the
Fund's return in the event the option expires unexercised, or is terminated at a
profit. The amount of the premium will reflect, among other things, the
relationship of the market price of the underlying security to the exercise
price of the option, the term of the option, and the volatility of the market
price of the underlying security. By writing a call option, a Fund will limit
its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option. By writing a put
option, a Fund will assume the risk that it may be required to purchase the
underlying security for an exercise price higher than its then-current market
price, resulting in a potential capital loss if the purchase price exceeds the
market price plus the amount of the premium received.

A Fund may terminate an option that it has written prior to its expiration
by entering into a closing purchase transaction in which it purchases an option
having the same terms as the option written. The Fund will realize a profit (or
loss) from such transaction if the cost of such transaction is less (or more)
than the premium received from the writing of the option. Because increases in
the market price of a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from the repurchase of a
call option may be offset in whole or in part by unrealized appreciation of the
underlying security owned by the Fund.

When a Fund writes a call option but does not own the underlying security,
and when it writes a put option, the Fund may be required to deposit cash or
securities with its broker as "margin", or collateral, for its obligation to buy
or sell the underlying security. As the value of the underlying security
varies, the Fund may have to deposit additional margin with the broker.

PURCHASING PUT AND CALL OPTIONS ON SECURITIES. Each Fund may purchase put
options to protect its portfolio holdings in an underlying security against a
decline in market value. This protection is provided during the life of the put
option since the Fund, as holder of the put, is able to sell the underlying
security at the exercise price

10
<PAGE>

regardless of any decline in the underlying security's market price. For the
purchase of a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, any profit that the
Fund purchasing the put option might otherwise have realized on the underlying
security will be reduced by the premium paid for the put option and by
transaction costs.

A Fund may also purchase a call option to hedge against an increase in
price of a security that it intends to purchase. This protection is provided
during the life of the call option since the Fund, as holder of the call, is
able to buy the underlying security at the exercise price regardless of any
increase in the underlying security's market price. For the purchase of a call
option to be profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and transaction
costs. By using call options in this manner, any profit that the Fund
purchasing the call option might have realized had it bought the underlying
security at the time it purchased the call option will be reduced by the premium
paid for the call option and by transaction costs.

Each Fund, except for High Total Return Fund and Income and Growth Fund, is
restricted from purchasing put or call options if, as a result of any such
transaction, the aggregate cost of options held by a Fund at the time of such
transaction would exceed 5% of the total assets of such Fund.

SHORT SALES. Each of High Total Return Fund and Income and Growth 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 a
Fund contemporaneously owns or has the right to obtain securities identical to
those sold short.

When a 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.

OVER-THE-COUNTER OPTIONS. Over-the-counter ("OTC") options are purchased
from or sold to dealers or financial institutions that have entered into direct
agreements with a Fund. The Staff of the Division of Investment Management of
the Securities and Exchange Commission (the "SEC") has taken the position that
OTC options purchased by a Fund are illiquid securities. Although the Staff has
indicated that it is continuing to evaluate this issue, pending further
developments, the Funds intend to enter into OTC options transactions only with
primary dealers in U.S. Government Securities and, in the case of OTC options
written by a Fund, only pursuant to an agreement that will assure that the Fund
will at all times have the right to repurchase the option written by it from the
dealer at a specified formula price. The Fund will treat the amount by which
such

11
<PAGE>

formula price exceeds the amount, if any, by which the option may be
"in-the-money" as an illiquid investment. The Adviser monitors the
creditworthiness of dealers with whom a Fund enters into OTC option transactions
under the general supervision of the Trustees of the Funds. If the transaction
dealer fails to make or take delivery of the U.S. Government securities
underlying an option it has written in accordance with the terms of the option
as written, the Funds would lose the premium paid for the option as well as any
anticipated benefit of the transaction. It is the present policy of the Funds
not to enter into any OTC option transaction if, as a result, more than 15% of
the Fund's net assets would be invested in (i) illiquid investments (determined
under the foregoing formula) relating to OTC options written by the Fund, (ii)
OTC options purchased by the Fund, (iii) securities that are not readily
marketable, and (iv) repurchase agreement maturing in more than seven days.

STOCK INDEX OPTIONS. Each of High Total Return Fund and Income and Growth
Fund may purchase stock index options to hedge against risks of broad price
movements in the equity markets that, in some market environments, may correlate
more closely with movements in the value of lower rated bonds than with changes
in interest rates. When a Fund sells an option on a stock index, it will have to
establish a segregated account with its custodian in which the Fund will deposit
cash or cash equivalents or a combination of both in an amount equal to the
market value of the option, and will have to maintain the account while the
option is open. For some options, no liquid secondary market may exist or the
market may cease to exist.

RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of a Fund's
options strategies depends in large part on the ability of the Adviser to
forecast correctly interest rate and market movements. For example, if a Fund
were to write a call option based on the Adviser's expectation that the price of
the underlying security would fall, but the price rose instead, the Fund could
be required to sell the security upon exercise at a price below the current
market price. Similarly, if a Fund were to write a put option based on the
Adviser's view that the price of the underlying security would rise, but the
price fell instead, the Fund could be required to purchase the security upon
exercise at a price higher than the current market price.

When a Fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction before the
option's expiration. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent sufficient to
cover the option premium and transaction costs, the Fund will lose part or all
of its investment in the option. This contrasts with an investment by the Fund
in the underlying security, since the Fund will not realize a loss if the
security's price does not change.

The effective use of options also depends on a Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. There
is no assurance

12
<PAGE>

that a Fund will be able to effect closing transactions at any particular time
or at an acceptable price.

If a secondary market in options were to become unavailable, the Funds
could no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if
unusual events, such as volume in excess of trading or clearing capability, were
to interrupt its normal operations.

A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions. For
example, if an underlying security ceases to meet qualifications imposed by the
market or the Options Clearing Corporation, new series of options on that
security will no longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options market were to
become unavailable, a Fund, as a holder of an option would be able to realize
profits or limit losses only by exercising the option, and the Fund, as option
writer, would remain obligated under the option until expiration or exercise.

Disruptions in the markets for the securities underlying options purchased
or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the Fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with considerable losses in trading if the security reopens
at a substantially different price. In addition, the Options Clearing
Corporation, or other options markets, may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, the Fund, as purchaser or writer of an option, will be locked
into its position until one of the two restrictions has been lifted. If the
Options Clearing Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by the writers of
all outstanding calls in the event of exercise, it may prohibit indefinitely the
exercise of put options. The Fund, as holder of such a put option, could lose
its entire investment if the prohibition remained in effect until the put
option's expiration.

Special risks are presented by internationally-traded options. Because of
time differences between the United States and various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when United States
markets are closed. As a result, option premiums may not reflect the current
prices of the underlying interest in the United States.

FUTURES CONTRACTS. Each Fund may enter into futures contracts. The Funds
will enter into these transactions solely for the purpose of hedging against the
effects of changes in the value of its portfolio securities or those it intends
to purchase due to

13
<PAGE>

anticipated changes in interest rates and currency values, and not for the
purpose of speculation. A futures contract to sell, for example, a debt
security or foreign currency (a "Short" futures position), creates an obligation
by the seller to deliver a specified amount of the underlying security at a
certain future time and price. A futures contract to purchase a debt security
or foreign currency (a "long" futures position) creates an obligation by the
purchaser to take delivery of a specified amount of the underlying security at a
certain future time and price. The specific instruments delivered or taken,
respectively, at the settlement date are not determined until on or near that
date. The determination is made in accordance with the rules of the exchange on
which the futures contract sale or purchase was made. Futures contracts are
traded in the United States only on commodity exchanges or boards of trade,
known as "contract markets," approved for such trading by the Commodity Futures
Trading Commission (the "CFTC"), and must be executed through a futures
commission merchant or brokerage firm that is a member of the relevant contract
market.

Although futures contracts by their terms call for actual delivery or
acceptance of commodities or securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a futures contract
for the same aggregate amount of the specific type of financial instrument or
commodity with the same delivery date. If the price of the initial sale of the
futures contract exceeds the price of the offsetting purchase, the seller is
paid the difference and realizes a gain. Conversely, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller realizes a
loss. Similarly, the closing out of a futures contract purchase is effected by
the purchaser's entering into a futures contract sale. If the offsetting sale
price exceeds the purchase price, the purchaser realizes a gain, and if the
purchase price exceeds the offsetting sale price, he realizes a loss. In
general, 40% of the gain or loss arising from the closing out of a futures
contract traded on an exchange approved by the CFTC is treated as short-term
gain or loss, and 60% is treated as long-term gain or loss.

A Fund may sell, for example, interest rate futures contracts in
anticipation of an increase in the general level of interest rates. Generally,
as interest rates rise, the market value of the securities held by the Funds
will fall, thus reducing their net asset value. This interest rate risk can be
reduced without employing futures as a hedge by selling such securities and
either reinvesting the proceeds in securities with shorter maturities or by
holding assets in cash. However, this strategy entails increased transaction
costs in the form of dealer spreads and brokerage commissions and would
typically reduce the Fund's average yield as a result of the shortening of
maturities.

The sale of interest rate futures contracts provides a means of hedging
against rising interest rates. As rates increase, the value of a Fund's short
position in the futures contracts will also tend to increase, thus offsetting
all or a portion of the depreciation in the market value of the Fund's
investments that are being hedged. While the Fund will incur commission
expenses in selling and closing out futures positions (which is done by

14
<PAGE>

taking an opposite position in the futures contract), commissions on futures
transactions tend to be lower than transaction costs incurred in the purchase
and sale of portfolio securities.

INTEREST RATE FUTURES CONTRACTS. Each Fund may enter into interest rate
futures contracts. An interest rate futures contract provides for the future
sale and purchase of a specified amount of a certain debt security at a stated
date, place and price. The Funds may enter into interest rate futures contracts
to protect against fluctuations in interest rates affecting the value of debt
securities that a Fund either holds or intends to acquire. Interest rate
futures contracts currently are based on long-term Treasury Bonds, Treasury
Notes, three-month Treasury Bills and Government National Mortgage Association
modified pass-through mortgage-backed securities ("GNMA pass-through
securities"), and 90-day commercial paper. If a Fund invests in tax-exempt
securities issued by a governmental entity, the Fund may purchase and sell
futures contracts and related options on U.S. Treasury securities when, in the
opinion of the Adviser, price movements in Treasury security futures and related
options will correlate closely with price movements in the tax-exempt securities
that are the subject of the hedge.

INDEX FUTURES CONTRACTS. Each Fund may enter into stock index futures
contracts. An index futures contract is a contract to buy or sell units of an
index at a specified future date at a price agreed upon when the contract is
made. Entering into a contract to buy units of an index is commonly referred to
as buying or purchasing a contract or holding a long position in the index.
Entering into a contract to sell units of an index is commonly referred to as
selling a contract or holding a short position. A unit is the current value of
the index. A Fund may enter into stock index futures contracts, debt index
futures contracts, or other index futures contracts appropriate to its
objective. A Fund may also purchase and sell options on index futures
contracts.

For example, the Standard & Poor's ("S&P") Composite 500 Stock Price Index
("S&P 500") is composed of 500 selected common stocks, most of which are listed
on the New York Stock Exchange. The S&P 500 assigns relative weightings to the
common stocks included in the Index, and the value fluctuates with changes in
the market values of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500 were $150, one
contract would be worth $75,000 (500 units x $150). The stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the contract.
For example, if a Fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150 and the S&P 500
is at $154 on that future date, the Fund will gain $2,000 (500 units x gain of
$4). If a Fund enters into a futures contract to sell 500 units of the stock
index at a specified future date at a contract price of $150 and the S&P 500 is
at $152 on that future date, the Fund will lose $1,000 (500 units x loss of $2).

15
<PAGE>

FOREIGN CURRENCY FUTURES CONTRACTS. High Total Return Fund, Income and
Growth Fund and Strategic Income Fund may enter into foreign currency futures
contracts on domestic and foreign exchanges. A foreign currency futures
contract provides for the future sale and purchase of a specified amount of a
certain foreign currency at a stated date, place and price. The Funds may
enter into foreign currency futures contracts to attempt to establish the rate
at which it would be entitled to make a future exchange of United States
dollars for another currency. At present, foreign currency futures contracts
are based on British pounds, German deutschmarks, Canadian dollars, Japanese
yen, French francs, Swiss francs, and ECUs.

OPTIONS ON INTEREST RATE FUTURES CONTRACTS. The Funds may purchase and
sell put and call options on interest rate futures contracts as a hedge against
changes in interest rates, in lieu of purchasing and writing options directly on
the underlying security or purchasing and selling the underlying futures
contracts. The purchase of an option on an interest rate futures contract will
give the Funds the right to enter into a futures contract to purchase (in the
case of a call option) or to enter into a futures contract to sell (in the case
of a put option) a particular debt security at a specified exercise price at any
time prior to the expiration date of the option.

OPTIONS ON FOREIGN CURRENCY FUTURES. High Total Return Fund, Income and
Growth Fund and Strategic Income Fund may purchase and sell put and call options
on foreign currency futures. The purchase of options on foreign currency
futures contracts gives each Fund the right to enter into a futures contract to
purchase (in the case of a call option) or to sell (in the case of a put option)
a particular currency at a specified price at any time during the period before
the option expires. Options on foreign currency futures currently are available
with respect to British pounds, German deutsche marks and Swiss francs. The
Funds may purchase options on foreign currency futures as a hedge against
fluctuating currency values. A Fund may use options on futures contracts in
lieu of purchasing or writing options directly on the underlying securities or
purchasing and selling the underlying futures. For example, to hedge against a
possible decrease in the value of its portfolio securities, a Fund may purchase
put options or write call options on futures contracts rather than sell futures
contracts. Similarly, a Fund may purchase call options or write put options on
futures contracts, rather than purchase such futures, to hedge against possible
increases in the price of debt securities that the Fund intends to purchase.
Such options generally operate in the same manner as options purchased or
written directly on the underlying investments. The potential loss related to
the purchase of an option on a futures contract is limited to the premium paid
for the option plus related transaction costs. A call option sold by a Fund
exposes the Fund during the term of the option to the possible loss of an
opportunity to realize appreciation in the market price of the underlying
security or to the possible continued holding of a security that might otherwise
have been sold to protect against depreciation in the market price of the
security. In selling puts, there is a risk that a Fund may be required to buy
the underlying security at a disadvantageous price. Options on interest rate
futures contracts currently are available with respect to Treasury Bonds,
Treasury

16
<PAGE>

Notes, and Eurodollars.

OPTIONS ON INDEX FUTURES. Options on index futures are similar to options
on securities except that options on index futures give the purchaser the right,
in return for the premium paid, to assume a position in an index futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. The delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the index futures contract, at exercise, exceeds (in
the case of a call) or is less than (in the case of a put) the exercise price of
the option on the index futures. If an option is exercised on the last trading
day prior to its expiration date, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the closing
level of the index of options. Those who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.

OPTIONS ON INDICES. As an alternative to purchasing call and put options
on index futures, a Fund may purchase and sell call and put options on the
underlying indices themselves. Such options would be used in a manner identical
to the use of options on index futures.

LIMITATIONS AND OTHER REQUIREMENTS RELATING TO FUTURES AND RELATED OPTIONS.
A Fund will not purchase or sell futures contracts or options on futures
contracts or indices if, as a result, the sum of the margin deposits on its
existing futures contracts and related options positions and premiums paid for
options on futures contracts would exceed 5% of the Fund's total assets. For
each long position that High Total Return Fund, Income and Growth Fund or
Strategic Income Fund enters into, it will segregate cash or cash equivalents
having a value equal to the market value of the contract as collateral with the
custodian of the Fund. For the remaining Funds, with respect to each futures
contract purchased or long position in an option, the Fund will set aside in a
segregated account at its custodian bank an amount of cash or short term U.S.
Government Securities equal to the total market value of such contracts less the
initial margin deposited therefor.

The High Total Return Fund and Income and Growth Fund will not use leverage
when entering into long futures contracts or related options. Each of the
remaining Funds will sell futures contracts only to offset expected declines in
the value of portfolio securities, and the value of such futures contracts will
not exceed the total market value of those securities (plus such additional
amount as may be necessary because of differences in the volatility factor of
the portfolio securities vis-a-vis the futures contracts).

Unlike when a Fund purchases or sells a security, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, the Fund is required to deposit with its custodian in
a segregated account in the name of the

17
<PAGE>

futures broker an amount of cash and/or U.S. Government Securities, equal to
approximately 1% to 5% of the contract price, which amount is subject to change
by the exchange on which the contract is traded or by the broker. This amount
is known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in securities transactions in that
futures contract margin does not involve the borrowing of funds to finance the
transactions. Rather, initial margin is similar to a performance bond or good
faith deposit that is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied. Futures
contracts also involve brokerage costs.

Subsequent payments, called "variation margin" or "maintenance margin" to
and from the broker (or the custodian) are made on a daily basis as the price of
the underlying security or commodity fluctuates, making the long and short
positions in the futures contract more or less valuable. This is known as
"marking to the market." For example, when a Fund has purchased a futures
contract on a security and the price of the underlying security has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment based on that increase in value. Conversely, when a
Fund has purchased a security futures contract and the price of the underlying
security has declined, the position would be less valuable and the Fund would be
required to make a variation margin payment to the broker. Similar requirements
relating to the payment of initial and variation margin apply to parties
engaging in options on futures transactions.

A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by the Fund. The Fund may close its positions by taking opposite
positions, which will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then made; additional
cash is required to be paid by or released to the Fund, and the Fund realizes a
loss or a gain. Such closing transactions involve additional commission costs.

RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. Successful
use of futures contracts by a Fund is subject to the Adviser's ability to
predict movements in the direction of interest rates and other factors affecting
securities markets. For example, if a Fund has hedged against the possibility
of decline in the values of its investments and the values of its investments
increase instead, the Fund will have lost part or all of the benefit of the
increase through payments of daily maintenance margin. A Fund may have to sell
investments at a time when it may be disadvantageous to do so in order to meet
margin requirements.

The use of options and futures involves the risk of imperfect correlation
between movements in options and futures prices and movements in the price of
securities that are the subject of the hedge. The successful use of these
strategies also depends on the ability of the Adviser to forecast correctly
interest rate movements and general stock

18
<PAGE>

market price movements. The risk increases as the composition of the portfolio
of a Fund using these strategies diverges from the composition of the relevant
option or futures contract.

Compared to the purchase or sale of futures contracts, the purchase of call
or put options on futures contracts involves less potential risk to a Fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss to a Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.

There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures that may interfere with the timely execution of customer
orders.

The effective use of options and futures strategies by a Fund depends,
among other things, on the Fund's ability to terminate options and futures
positions at times when the Adviser deems it desirable to do so. Although a
Fund will not enter into an option or futures position unless the Adviser
believes that a liquid market exists for such option or future, there can be no
assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price. The Funds generally expect that
their options and futures transactions will be conducted on recognized
securities exchanges. In certain instances, however, a Fund may purchase and
sell options in the over-the-counter market. The Staff of the SEC considers
over-the-counter options and securities underlying them to be illiquid. A
Fund's ability to terminate option positions established in the over-the-counter
market may be more limited than in the case of exchange-traded options and may
also involve the risk that securities dealers participating in such transactions
would fail to meet their obligations to the Fund.

For instance, to reduce or eliminate a hedge position held by a Fund, the
Fund may seek to close out a position. The ability to establish and close out
positions will be subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will develop or continue
to exist for particular futures contracts or options. Reasons for the absence
of a liquid secondary market on an exchange include the following: (i) there may
be insufficient trading interest in certain contracts or options; (ii)
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of contracts or options,
or underlying securities; (iv) unusual or unforeseen circumstances may interrupt
normal operations on an exchange; (v) the facilities of an exchange or a
clearing corporation may not at all times be adequate to handle current trading
volume; or (vi) one or more exchanges

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<PAGE>

could, for economic or other reasons, decide or be compelled at some future date
to discontinue the trading of contracts or options (or a particular class or
series of contracts or options), in which event the secondary market on that
exchange for such contracts or options (or in the class or series of contracts
or options) would cease to exist, although outstanding contracts or options on
the exchange that had been issued by a clearing corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each of High Total Return Fund,
Income and Growth Fund and Strategic Income Fund may engage in foreign currency
exchange transactions to hedge against uncertainty in the level of future
exchange rates. The Funds may conduct currency exchange transactions on a
"spot" (i.e., cash) basis at the rate then prevailing in the currency exchange
market, or on a forward basis, by entering into futures or forward contracts to
purchase or sell currency. A Fund's dealings in foreign currency exchange
contracts is limited to hedging.

FORWARD FOREIGN CURRENCY CONTRACTS. A forward foreign currency contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract as agreed
upon by the parties, at a price set at the date of the contract. Forward
currency contracts are entered into in the interbank market on a principal basis
directly between currency dealers, which usually are large commercial banks and
brokerage houses, and their customers, and, therefore, generally involve no
margin, commissions or other fees. Forward currency contracts will establish a
rate of exchange that can be achieved in the future and thus involve the risk of
loss due to a decline in the value of the hedged currency increases.

OPTIONS ON FOREIGN CURRENCY. Each of High Total Return Fund, Income and
Growth Fund and Strategic Income Fund may also purchase and sell put and call
options for the purpose of hedging against changes in future currency exchange
rates. An option on a foreign currency gives the purchasers, in return for a
premium paid plus related transaction costs, the right to sell (in the case of a
put option) or to buy (in the case of a call option) the underlying currency at
a specified price until the option expires. The value of an option on foreign
currency depends upon the value of the foreign currency when compared to the
value of the United States dollar.

Currency options traded on United States or other exchanges may be subject
to position limits, which may affect the ability of the Fund to hedge its
positions. The Funds will purchase and sell options on foreign exchanges to the
extent permitted by the CFTC.

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<PAGE>

The Funds may purchase or sell options on currency only when the Adviser
believes that a liquid secondary market exists for these options; however, no
assurance can be given that a liquid secondary market will exist for a
particular option at any specific time.

RISKS OF FOREIGN CURRENCY TRANSACTIONS. Foreign currency futures contracts
and related options, forward foreign currency contracts and options on foreign
currency may be traded on foreign exchanges. The regulation of transactions on
these exchanges may be less extensive than the regulation of United States
exchanges. The funds will trade only those options approved by the CFTC.
Transactions on foreign exchanges also may not involve a clearing mechanism and
related guarantees, and may be subject to the risk of governmental actions
affecting trading in, or the prices of, foreign securities. The value of such
positions also could be affected adversely by: (1) foreign, political, legal and
economic factors; (2) a lack of information on which to make trading decisions
compared to that which is available in the United States; (3) a delay in the
ability to act on significant events occurring in the foreign markets during
non-business hours in the United States, (4) different exercise and settlement
terms from those imposed in the United States; and (5) less trading volume than
occurs on United States exchanges.

In addition, foreign exchanges offer less protection against defaults in
the forward trading of currencies than is available on United States exchanges.
Because a forward foreign currency contract is not guaranteed by an exchange or
clearinghouse, a default on the contract would deprive the Fund of unrealized
profits or would force the Fund to cover its commitments for purchase of resale,
if any, at the current market price.

The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved is not generally
possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the dates the currency exchange transactions are entered into and the
dates they mature.

It is impossible to forecast precisely the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security or securities being hedged is less than the amount
of foreign currency the Fund is obligated to deliver and a decision is made to
sell the security or securities and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security or securities if the
market value of such security or securities exceeds the amount of foreign
currency the Fund is obligated to deliver.

A Fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times not
involve

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<PAGE>

currencies in which its Portfolio securities are then denominated. The Adviser
will engage in such "cross hedging" activities when it believes that such
transactions provide significant hedging opportunities for the Fund. Cross
hedging transactions by the Fund involve the risk of imperfect correlation
between changes in the values of the currencies to which such transactions
relate and changes in the value of the currency or other asset or liability that
is the subject of the hedge.

A holder of a put option on a currency has the right, on or before a
specified date, to sell to the other party to the contract a specified amount of
a currency for a specified price measured in another currency. A holder of a
call option on a currency has a similar right to buy a specified amount of a
currency from the other party. The Fund pays a purchase price (called a
"premium") when it initially acquires the currency option. Currency options
are traded primarily in the over-the-counter market, although options on foreign
currencies have recently been listed on several exchanges. Options are traded
not only on the currencies of individual countries, but also on the European
Currency Unit ("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the European Union's
European Monetary System.

Currency options involve a number of risks. These include the risk, in the
case of over-the-counter options, that the other party will default on its
obligations. Such a default could deprive the Strategic Income Fund of the
expected benefits of the hedging transaction and could result in expenses and
delays if the Fund seeks to pursue remedies against the defaulting party.

Another risk associated with options is that, if anticipated currency price
movements do not occur, the Strategic Income Fund may never exercise its rights
under the option, in which case the option will expire worthless and the Fund
will not recover the value of the premium it paid to acquire the option.

Options on currencies are affected by many of the same factors that
influence exchange rates and investments generally. The value of any currency,
including U.S. dollars and foreign currencies, may be affected by political and
economic factors applicable to the issuing country. The exchange rates of
foreign currencies (and therefore the values of foreign currency options) may be
affected significantly, fixed, or supported directly or indirectly by U.S. and
foreign government actions. Government intervention may increase the risk
involved in purchasing or selling foreign currency options, since exchange rates
may not be free to fluctuate in response to other market forces.

The value of a foreign currency option reflects the value of an exchange
rate, which in turn reflects the relative values of two currencies, the U.S.
dollar and the particular foreign currency involved. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be

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<PAGE>

involved in the exercise of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market for the underlying foreign
currencies in connection with options at prices that are less favorable than for
round lots. Foreign government restrictions or taxes could result in adverse
changes in the cost of acquiring or disposing of foreign currencies.

There is no systematic reporting or last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
round-lot transactions in the interbank market and thus may not reflect exchange
rates for smaller odd-lot transactions (less than $1 million) where rates may be
less favorable. The interbank market in foreign currencies is a 24-hour a day,
global market. To the extent the options markets are closed while the markets
for the underlying currencies are open, significant price and rate movements may
take place in the underlying markets that cannot be reflected in the options
markets.

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 the Adviser 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

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<PAGE>

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 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 the Adviser 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

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<PAGE>

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.

ADDITIONAL INVESTMENT TECHNIQUES

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. The Adviser will use standards set 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 Advantage
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

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<PAGE>

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 securities will only be made to
firms considered by the Adviser 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

26
<PAGE>

Fund may dispose of a security prior to settlement if the Adviser 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 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

27
<PAGE>

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.

When mortgages in the pool underlying a GNMA Certificate are prepaid by

28
<PAGE>

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 High Total Return, High Yield and Strategic
Income 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. High Total Return may invest up to 50%
of its assets in securities of foreign issuers, High Yield up to 35%,
and Strategic Income Fund may invest up to 60% of its total assets.
Eurodollar certificates of deposit are excluded for purposes of this
limitation for Strategic Income.

ADDITIONAL INFORMATION ON HIGH YIELD SECURITIES. Strategic Income Fund,
High Yield Fund, High Total Return Fund, and Income 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

29
<PAGE>

both, or an unanticipated rise in interest rates, may impair the ability of the
issuer to make payments of interest and 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 the Adviser 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

30
<PAGE>

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 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

The Adviser, and Subadviser in the case of Special 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 the Adviser includes the Subadviser, but only with respect to
Special Fund. It is the practice of the Adviser 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 the Adviser, the rate is deemed by
the Adviser to be reasonable. Brokers may ask for higher rates of commission if
all or a portion of the securities involved in the transaction are positioned by
the broker, if the broker believes it has brought 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 the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that 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. 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

31
<PAGE>

in general, including the sale of mutual funds managed and sponsored by the
Adviser. The Adviser does not offer or promise to any broker an amount or
percentage of brokerage commissions as an inducement or reward for the sale of
shares of the Funds. Over-the-counter purchases and sales are transacted
directly with principal market-makers, except in those circumstances where, in
the opinion of the Adviser, better prices and execution are available elsewhere.

In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry groups
and individual issues. Research services will vary from firm to firm, with
broadest coverage generally from the large full-line firms. Smaller firms, in
general, tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political developments; many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff, since the brokers, as a group, tend
to monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, the outside research provides the Adviser with a
diverse perspective on financial markets. Research and investment information
is provided by these and other brokers at no cost to the Adviser and is
available for the benefit of other accounts advised by the Adviser and its
affiliates; and not all of this information will be used in connection with the
Funds. While this information may be useful in varying degrees and may tend to
reduce the Adviser's expenses, it is not possible to estimate its value, and, in
the opinion of the Adviser, it

32
<PAGE>

does not reduce the Adviser's expenses by a determinable amount. The extent to
which the Adviser makes use of statistical, research and other services
furnished by brokers is considered by the Adviser in the allocation of brokerage
business, but there is no formula by which such business is allocated. The
Adviser does so in accordance with its judgment of the best 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 the Adviser 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, the Adviser 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 Government, High Yield, Income, Growth, Special
and Strategic Income Funds, commissions to Advest, Inc. ("Advest"), an affiliate
of the Funds' former investment adviser.

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

33
<PAGE>

BROKERAGE COMMISSIONS
PAID DURING MOST RECENT FISCAL YEARS

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

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

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 the Adviser 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.

SERVICES OF THE ADVISER AND 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, the Adviser, subject to the authority of the Trustees
of the Funds, and subject to delegation of certain responsibilities to the
Subadviser for the Special Fund, is responsible for furnishing continuous
investment supervision to the Funds and is responsible for the management of
each Fund's portfolio.

The Adviser is an indirect, majority-owned subsidiary of ReliaStar
Financial Corp. ("ReliaStar"). Combined minority interests in the Adviser
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 Northwestern National Life Insurance
Company ("Northwestern") 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 the Adviser is Two Pickwick Plaza,
Greenwich, Connecticut 06830. The address of ReliaStar is 20 Washington
Avenue South, Minneapolis, Minnesota 55401.

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

The Adviser charges a fee to the High Total Return Fund and Income and
Growth 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

34
<PAGE>

0.55% on the remaining aggregate daily net assets of each Fund in excess of $1
billion.

The Adviser 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, the Adviser 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 the Adviser. Currently, the most restrictive of such
limitations would require the Adviser 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.

The Investment Advisory Agreement for the Income and Growth Fund and
High Total Return Fund was approved by the Trustees of the Northstar
Advantage 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.

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 the Adviser, 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 a Subadvisory Agreement between the Adviser and the
Subadviser, effective February 1, 1996, Navellier acts as subadviser to
Special Fund. In this capacity, Navellier Fund Management, Inc.,
subject to the supervision and control of the Adviser and the Trustees of
Special Fund, will manage Special Fund's portfolio investments, consistently
with such

35
<PAGE>

Fund's investment objective, and will execute any of Special Fund's
investment policies that it deems appropriate to utilize from time to time.
Fees payable under the Subadvisory Agreement will accrue daily and be paid
monthly by the Adviser. As compensation for its services, the Adviser will
pay the Subadviser at the annual rate of 0.48 of 1% of the average daily net
assets of Special Fund. The Subadviser is wholly-owned and controlled by its
sole stockholder, Louis G. Navellier. The Subadviser's address is: Call Box
10012, Incline Village, Nevada 89450-1012. The Subadvisory Agreement 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 may
be terminated without payment of any penalty by the Adviser, the Subadviser,
the Trustees of such Fund, or the shareholders of such 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 Special Fund, or the vote of a majority of the
outstanding voting securities of Special Fund, and the vote, cast in person
at a meeting duly called and held, of a majority of the Trustees of Special
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 the Adviser 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 the Adviser for compliance with requirements under applicable law and
with the investment policies and restrictions of the Funds. The Administrator
is an affiliate of the Adviser. 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 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

36
<PAGE>

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 the Adviser and Administrator the following investment advisory and
administrative fees, respectively:

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

<TABLE>
<CAPTION>
1995 1994
---- ----
Advisory Fees Administrative Fees Advisory Fees Administrative Fees
<S> <C> <C> <C> <C>

Income and Growth Fund $1,158,432 $154,457 $509,440(1) $64,452

High Total Return Fund $941,310 $125,508 $382,777(2) $49,816

</TABLE>
(1) Does not reflect expense reimbursement of $57,594.

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

Prior to June 5, 1995, the Government Securities, Strategic Income, High
Yield, Income, Growth and Special Funds were managed by Boston Security
Counsellors, 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:

TOTAL ADVISORY FEES PAID
DURING YEAR ENDED DECEMBER 31,

Fund 1995 1994 1993

Government Fund (1) 678,996 $747,846 $767,370
High Yield Fund 683,323 $622,761 $432,063
Income Fund 477,095 $519,729 $447,631
Growth Fund 593,282 $604,576 $517,203
Special Fund 287,311(2) $268,139 $145,178
Strategic Income Fund(3) 252,201 $57,726 --

(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.

37
<PAGE>

NET ASSET VALUE

For each Fund in the Northstar Advantage 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 Advantage Special, Growth, Income, High Yield,
Strategic Income, and Government Securities 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 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

38
<PAGE>

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 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) the Adviser 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 with the same or similar investment objective, and
PROVIDED the following conditions are met: such redemption occurred no more
than 60 days 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.

<PAGE>

HOW TO OBTAIN 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.

<PAGE>

THE RIGHT OF REDEMPTION

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 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

41
<PAGE>

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: (1) the shares that will be acquired in the exchange
(the "Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired shares will be registered to the same shareholder
account as the shares to be surrendered (the "Exchanged Shares"); (3) the
Exchanged Shares must have been held in the shareholder's account for at least
30 days prior to the exchange; (4) 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 (5) a properly executed exchange request
has been received by the Transfer Agent.

42
<PAGE>

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 the Adviser 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, the Adviser 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.

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

43
<PAGE>

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 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.

44
<PAGE>

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 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.

<PAGE>

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
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

46
<PAGE>

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 applies where shares of a Fund originally
acquired with a sales

47
<PAGE>

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

48
<PAGE>

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
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.

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

49
<PAGE>

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
Growth Fund, Special Fund and Strategic Income Fund), 0.75% (in the case of
Income 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 Advantage 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.

50
<PAGE>

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 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.

51
<PAGE>

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:

12 b-1 FEES

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
Regional Marketing Manager $_______ $_________ $_______
Expenses/Convention Expense $168,576 $ 56,473 $ 21,461
Commissions Paid $_______ $1,070,218 $467,143
Marketing Expense $ 86,328 $_________ $_______

Total $602,601 $1,182,344 $599,125

HIGH TOTAL RETURN FUND

CLASS A CLASS B CLASS C

Salaries/Overrides $530,951 $ 176,089 $ 23,877
Regional Marketing Manager $_______ $_________ $_______
Expenses/Convention Expense $149,561 $ 60,883 $ 5,069
Commissions Paid $_______ $3,009,409 $ 90,784
Marketing Expense $ 70,460 $_________ $_______

Total $750,972 $3,246,381 $119,730

52
<PAGE>

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

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

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:

GOVERNMENT HIGH
SECURITIES YIELD
EXPENSE FUND FUND

CLASS A CLASS B CLASS C CLASS T CLASS A CLASS B CLASS C CLASS T
------- ------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries/Overrides 17,259 6,140 93 _______ 40,871 72,434 9,138 _______
Regional Marketing Manager _______ _______ -- _______ ______ _________ _______ _______
Expenses/Convention Expense 1,070 484 -- _______ 5,185 4,463 351 _______
Commissions Paid _______ 95,686 45 565,766 ______ 1,154,747 37,794 545,444
Marketing Expense 736 _______ _______ _______ 2,298 _________ _______ _______

STRATEGIC
INCOME
EXPENSE FUND
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
------- ------- ------- -------
<S> <C> <C> <C> <C>

Salaries/Overrides 122,525 29,029 4,915 _______
Regional Marketing Manager _______ _______ _______ _______
Expenses/Convention Expense 55,380 15,605 654 _______
Commissions Paid _______ 503,657 18,664 169,468
Marketing Expense 25,935 _______ _______ _______

</TABLE>

GROWTH SPECIAL
EXPENSE FUND FUND
CLASS A CLASS B CLASS C CLASS T CLASS A CLASS B CLASS C CLASS T
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Salaries/Overrides 5,125 4,369 239 _______ 7,719 4,473 173 _______
Regional Marketing Manager _______ _______ _______ _______ _______ _______ _______ _______
Expenses/Convention Expense 1,742 437 12 _______ 2,375 394 14 _______
Commissions Paid _______ 75,145 482 437,610 _______ 60,874 600 200,958
Marketing Expense 675 _______ _______ _______ 884 _______ _______ _______

INCOME
EXPENSE FUND
<CAPTION>
CLASS A CLASS B CLASS C CLASS T
------- ------- ------- -------
<S> <C> <C> <C> <C>

Salaries/Overrides 3,758 4,132 598 _______
Regional Marketing Manager _______ _______ _______ _______
Expenses/Convention Expense 584 407 21 _______
Commissions Paid _______ 69,328 2,130 316,699
Marketing Expense 257 _______ _______ _______

</TABLE>

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

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

<PAGE>

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 of the Northstar
Advantage Trust and each Northstar Advantage Fund is c/o the particular Fund,
Two Pickwick Plaza, Greenwich, CT 06830. The current Trustees were elected by
shareholders of the Fund, effective June 2, 1995:

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

POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS
- --------------------------------------------------------------------------------

Robert B. Goode, Jr. Trustee 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 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 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 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 Director, Chairman and Chief
President Executive Officer of Northstar and
NWNL Northstar Inc. Director and
President of Northstar
Administrators Corporation and
Director and Chairman of NWNL
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.

<PAGE>

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

POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS
- --------------------------------------------------------------------------------

John G. Turner* Trustee and Since May 1993, Chairman and CEO of
Chairman of ReliaStar and Northwestern National
the Board 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 Partner, Rogers & Wells. Director,
F.L. Putnam Investment Management
Co., Inc.

David W.C. Putnam Trustee 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 Financial Vice President of Boston
College (1970-1991); President
(since 1991) of New England
Fiduciary Company (financial
planning); Chairman (since 1987) of
Massachusetts Educational Financing
Authority; Vice Chairman of
Massachusetts Health and Education
Authority.

Walter H. May Trustee Retired. Former Marketing Director
for Piper Jaffrey, Inc.

Ernest N. Mysogland Vice (Income and Growth Fund, Growth
President Fund, Income Fund, Special Fund).
Executive Vice President and Chief
Investment Officer-Equities of
Northstar. From 1992 to August
1993, Senior Vice President and
Chief Investment Officer-Equities
of National Securities & Research
Corporation and Vice President of
National Affiliated Investment
Companies. Prior to joining
National in 1992, Mr. Mysogland was
the President & Chief Investment
Officer of Reinoso Asset
Management. From 1988 to 1991, Mr.
Mysogland was Executive Vice
President and Chief Investment
Officer of Gintel Equity
Management.

55
<PAGE>

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

POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS

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

Thomas Ole Dial Vice (High Total Return Fund, Income
President Fund, Strategic Income Fund, High
Yield Fund, Government Securities
Fund). 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 & Research Corporation,
Vice President of National
Affiliated Investment Companies,
and Vice President of NSR Asset
Management Corp. From 1988 to
1989, President, Dial Capital
Management.

Margaret D. Patel Vice (Government Securities Fund, Income
President Fund, Strategic Income Fund). Vice
President and Managing Director of
Northstar. Former Senior Vice
President of BSC (1988 to May
1995); Former President and
Portfolio Manager at Fixed Income
Asset Management, Inc. (1986 to
1988); Former Portfolio Manager at
American Capital and Dreyfus
Corporation (prior to 1988).

Prescott B. Crocker CFA, (Strategic Income Fund, High Yield
Vice Fund). Vice President and Managing
President Director of Northstar. Former
Senior Vice President and Director,
Fixed Income Investments of BSC
(November 1993 to May 1995); Former
Senior Portfolio Manager at
Colonial Management Associates,
Inc. (1975-1993); prior to 1993,
Mr. Crocker served in various
senior investment management
positions at Colonial Management
Associates, Inc.

Geoffrey Wadsworth Vice (Income and Growth Fund, Growth
President Fund, Special Fund). Vice President
of Northstar. Co-Manager of
Northstar Advantage Income and
Growth Fund and other Northstar
affiliated equity funds. Former
Vice President and Portfolio
Manager with National Securities &
Research Corporation.

<PAGE>
- --------------------------------------------------------------------------------
POSITION
WITH THE TRUST/ BUSINESS AFFILIATIONS
NAME, ADDRESS FUNDS AND PRINCIPAL OCCUPATIONS
- --------------------------------------------------------------------------------

Agnes Mullady Vice Senior Vice President and Chief
President and Financial Officer of Northstar,
Treasurer Senior Vice President and Treasurer
of Northstar Administrators
Corporation, and Vice President and
Treasurer of NWNL Northstar
Distributors, Inc. From 1987 to
1993 Treasurer and Vice President
of National Securities & Research
Corporation.

Lisa M. Hurley Vice Senior Vice President, General
President and Counsel of Northstar. Executive
Secretary Vice President and Secretary of
Northstar Administrators
Corporation, and Vice President and
Secretary of NWNL Northstar
Distributors, Inc. Former Vice
President and General Counsel of
National Securities & Research
Corporation.

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

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.

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.

As of January 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 January 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) Strategic Income Fund
---------------------
Merrill Lynch Pierce Fenner & Smith 10% (r)
Jacksonville, Fla.

Norwest Bank 6% (r)
Minneapolis, MN

Northern Life Ins. Co. 8% (r)
Minneapolis, MN

(2) High Yield Fund
---------------
Merrill Lynch Pierce Fenner & Smith 10% (r)
Jacksonville, Fla.

(3) Income and Growth Fund
----------------------
Merrill Lynch Pierce Fenner & Smith 13%(r)
Jacksonville, Fla.

Norwest Bank 11.7%(r)
Minneapolis, MN

(4) High Total Return Fund
----------------------
Merrill Lynch Pierce Fenner & Smith 21%(r)
Jacksonville, Fla.

57
<PAGE>

COMPENSATION TABLE
Fiscal year Ended October 31, 1995
Northstar Advantage Trust
(Income and Growth, High Total Return
and the former Northstar Advantage Multi Sector Bond Fund)

- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION BENEFITS ACCRUED AS PART ESTIMATED ANNUAL ALL FUNDS CURRENTLY IN
NAME, FROM EACH FUND OF FUND EXPENSES BENEFITS UPON NORTHSTAR FUNDS
POSITION RETIREMENT COMPLEX(b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alan L. Gosule, Esq. $1,417 N/A N/A $14,950
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Smith, Ph.D. $1,667 N/A N/A $15,350
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W.C. Putnam $1,417 N/A N/A $22,750
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert B. Goode, Jr. $4,083 N/A N/A $13,750
(Trustee)

- ------------------------------------------------------------------------------------------------------------------------------------
Paul S. Doherty $4,083 N/A N/A $15,250
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W. Wallace $4,083 N/A N/A $15,250
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Lipson -0- N/A N/A -0-
(President and
Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John G. Turner -0- N/A N/A -0-
(Chairman and Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

58
<PAGE>

COMPENSATION TABLE
Fiscal year Ended December 31, 1995
Government Securities, Strategic Income, High Yield, Income,
Growth and Special Funds

PENSION OR RETIREMENT TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION BENEFITS ACCRUED AS ESTIMATED ANNUAL ALL FUNDS CURRENTLY IN
NAME, FROM EACH FUND(a) PART OF FUND EXPENSES BENEFITS UPON NORTHSTAR FUNDS
POSITION RETIREMENT COMPLEX(b)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Alan L. Gosule, Esq. $1,908 $1,908 $1,908 N/A N/A $14,950
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Smith, Ph.D. $1,934 $1,934 $1,933 N/A N/A $15,350
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W.C. Putnam $5,258 $4,774 $1,460 N/A N/A $22,750
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert B. Goode, Jr. $ 708 $ 708 $ 708 N/A N/A $13,750
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Paul S. Doherty $ 708 $ 708 $ 708 N/A N/A $15,250
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W. Wallace $ 708 $ 708 $ 708 N/A N/A $15,250
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Lipson $ -0- $ -0- $ -0- N/A N/A $ -0-
(President and
Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John G. Turner $ -0- $ -0- $ -0- N/A N/A $ -0-
(Chairman and
Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

Alan L. Gosule, Esq. $1,908 $3,408 $1,908 N/A N/A $14,950
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Smith, Ph.D. $1,934 $3,433 $1,934 N/A N/A $15,350
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W.C. Putnam $2,906 $3,366 $2,984 N/A N/A $22,750
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert B. Goode, Jr. $ 708 $ 708 $ 708 N/A N/A $13,750
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Paul S. Doherty $ 708 $ 2208 $ 708 N/A N/A $15,250
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
David W. Wallace $ 708 $ 2208 $ 708 N/A N/A $15,250
(Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Lipson $ -0- $ -0- $ -0- N/A N/A $
(President and
Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
John G. Turner $ -0- $ -0- $ -0- N/A N/A $
(Chairman and
Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Prior to June 2, 1995 the Trustees who were not interested persons,
other than David Putman, 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.

(b) Compensation paid by six Advantage Fund trusts formerly advised by
BSC, the Northstar Advantage Trust funds and the Northstar/NWNL &
Trust funds.

59
<PAGE>

OTHER INFORMATION

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. has been selected as the independent
accountants of the Northstar Advantage Trust and each Northstar Advantage
Fund. 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 High Total Return and Income and Growth Funds, and First Data Investor
Services, 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.

REPORTS TO SHAREHOLDERS

The fiscal year of the Northstar Advantage 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

60
<PAGE>

accountants will be sent to shareholders each year.

ORGANIZATIONAL AND RELATED INFORMATION

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; High Yield Fund
(formerly The Advantage High Yield Bond Fund) was organized 1989; Income Fund
(formerly The Advantage Income Fund) was organized in 1986; Growth Fund
(formerly The Advantage Growth Fund) was organized in 1986; and Special Fund
(formerly The Advantage Special Fund) was organized in 1986. Northstar
Advantage Trust (formerly NWNL Northstar Series Trust), and two of its series
High Total Return Fund (formerly NWNL Northstar High Yield Bond Fund) and
Income and Growth Fund (formerly NWNL Northstar Income and Growth Fund), was
organized in 1993.

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.

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.

61
<PAGE>

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 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 Government Securities Fund,
the High Yield

62
<PAGE>

Fund, the Strategic Income Fund, and the Income Fund for the month ended
December 31, 1995, and the yield for Class A, B and C of the High Total Return
Fund for the month ended October 31, 1995 was as follows:

YIELD

FUND CLASS A CLASS B CLASS C CLASS T

Government Fund 5.58% 5.26% 5.24% 5.53%
High Yield Fund 8.43 8.09 8.14 8.53
Strategic Income Fund 5.68 5.34 5.38 5.45
Income Fund 3.95 3.20 2.40 3.48
High Total Return Fund 10.42 10.25 10.20 N.A

NON-STANDARDIZED TOTAL 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 ("None-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
Northstar Advantage Trust and for Class A, Class B, Class C and Class T shares
of the other Funds for the periods indicated.

NORTHSTAR ADVANTAGE 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.

SINCE
ONE YEAR INCEPTION*

HIGH TOTAL RETURN FUND

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

INCOME AND GROWTH FUND

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

The following table summarizes the calculation of Total Return for the
periods indicated

63
<PAGE>

through October 31, 1995, assuming the contingent deferred sales load HAS NOT
been assessed.

SINCE
ONE YEAR INCEPTION*

HIGH TOTAL RETURN FUND

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

INCOME AND GROWTH FUND

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

* The inception date for Class A, Class B and Class C shares of High Total
Return Fund and Income and Growth 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*

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

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*

Government Securities Fund 22.9 % 65.37% 113.54%
High Yield Fund 13.31% 147.14% 92.51%

<PAGE>

Income Fund 25.11% 76.92% 149.45%
Growth Fund 24.40% 89.16% 183.42%
Special Fund 11.34% 129.28% 143.95%
Strategic Income Fund 12.39% N/A 16.99%

___________________________

* The inception date for Class T shares of Government Securities, Income,
Growth and Special 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

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

CLASS A CLASS B CLASS C

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

OTHER INFORMATION CONCERNING FUND PERFORMANCE

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

65
<PAGE>

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 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, 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 Advantage 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 Advantage Trust
for the fiscal year ended October 31, 1995.

The audited financial statements of Government Securities Fund, High
Yield Fund, Income Fund, Growth Fund, Special Fund and Strategic Income 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 ADVANTAGE 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
October 31, 1995.

GOVERNMENT SECURITIES, INCOME, GROWTH AND SPECIAL FUNDS: Financial
Highlights for a share outstanding throughout the period February 3, 1986
(commencement of operations) to December 31, 1995.

HIGH YIELD FUND: Financial Highlights for a share outstanding throughout
the period June 5, 1989 (commencement of operations) through December 31, 1995.

STRATEGIC INCOME FUND: Financial Highlights for a share outstanding
throughout the period July 1, 1994 (commencement of operations) to December 31,
1995.

Included in Part B: The audited financial statements for the year ended
October 31, 1995 for the Northstar Advantage Trust and for the year ended
December 31, 1995 for the Government Securities, Strategic Income, High Yield,
Income, Growth and Special Funds, 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.

<PAGE>

(b) EXHIBITS - NORTHSTAR ADVANTAGE TRUST

(1) Form of Declaration of Trust*
(2) By-Laws*
(3)(4) N/A
(5) Investment Advisory Agreement*
(6) Underwriting Agreements*
(7) N/A
(8) Custody Agreement*
(9) (a) Transfer Agency Agreement*
(b) Administration Agreement*
(c) Administrative Services Agreement*
(10) Opinion of Counsel*
(11) Consent of Independent Public Accountants*
(12) Not Applicable
(13) N/A
(14 N/A
(15) Plans of Distribution pursuant to Rule 12b-1*
(16) Performance Information*
(17) Power of Attorney *1
(18) Inapplicable
(27) Financial Data Schedule (EX-27)*

- ---------------------
* Filed Herewith
(1) Except for Power of Attorney executed by Walter H. May, Powers of Attorney
were filed as an Exhibit to Registrant's PEA No. 6 and are incorporated
herein by reference.

<PAGE>

EXHIBITS - GOVERNMENT SECURITIES, INCOME, GROWTH, SPECIAL, HIGH YIELD AND
STRATEGIC INCOME FUNDS.

(1) Form of Amended and Restated Declaration of Trust (1)
(2) By-Laws (1)
(3)(4) Not Applicable
(5) (a) Form of Investment Advisory Agreement (1)
(b) Subadvisory Agreement for Northstar Advantage Special Fund*
(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) Not Applicable
(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*
(10) Opinion of Counsel*
(11) Consent of Independent Public Accountants*
(12) Annual Report to Shareholders*
(13) Not Applicable
(14) Not Applicable
(15) Form of Distribution Plan for Classes A, B, C and T Shares (1)
(16) Performance Information*
(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). Except for the Power of Attorney executed by Walter May, all powers of
attorney were filed as an Exhibit to the Registrant's Post-Effective Amendment
as follows and are incorporated herein by reference: PEA No. 6-Strategic Income
Fund; PEA No. 10-High Yield Fund; PEA No. 15-Government Securities Fund;
PEA No. 14-Income Fund, Growth Fund and Special Fund.

<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 January 31, 1996, the Registrant had the following number of record
security holders:

Title of Class Fund Number of Shareholders
- -------------- ---- ----------------------

Shares of Income & Growth Fund (A) 1576 (B) 2337 (C) 1588
Benefical High Total Return Fund (A) 3493 (B) 4607 (C) 572
Interest Government Securities (A) 103 (B) 323 (C) 4 (T) 6788
High Yield Bond (A) 469 (B) 1722 (C) 99 (T) 8602
Income (A) 73 (B) 363 (C) 24 (T) 5529
Growth (A) 155 (B) 481 (C) 26 (T) 7191
Special (A) 192 (B) 460 (C) 12 (T) 4118
Strategic Income (A) 368 (B) 937 (C) 73 (T) 2035

<PAGE>

ITEM 27. INDEMNIFICATION - NORTHSTAR ADVANTAGE TRUST

Section 4.3 of Registrant's Declaration of Trust provides the following:

(a) Subject to the exceptions and limitations contained in paragraph (b) below:

(i) every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust to the fullest extent permitted by law
against all liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having
been a Trustee or officer and against amounts paid or incurred by him in
the settlement thereof; and

(ii) the word "claim", "action", "suit" or "proceeding" shall apply to all
claims, actions or suits or proceedings (civil, criminal, administrative or
other including appeals), actual or threatened; and the words "liability"
and "expenses" shall include without limitation, attorneys fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.

(b) No indemnification shall be provided hereunder to a Trustee or officer:

(i) against any liability to the Trust, a series thereof, or the
Shareholders by reason of a final adjudication by a court or other body
before which a proceeding was brought or that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;

(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in reasonable belief that his
action was in the best interest of the Trust; and

(iii) in the event of a settlement or other disposition not involving a
final adjudication as provided in paragraph (b) (i) or (b) (ii) resulting
in a payment by a Trustee or officer, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office:

(A) by the court or other body approving the settlement or other disposition;
or

(B) based upon the review of readily available facts (as opposed to full trial-
type inquiry) by (x) vote of a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter) or (y) written opinion of
independent legal counsel.

(C) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any

<PAGE>

Trustee or officer may now or hereafter be entitled, shall continue as to a
person who has ceased to be such Trustee or officer and shall inure to the
benefit of the heirs, executors, administrators and assigns of such a
person. Nothing contained herein shall affect any rights to
indemnification to which personnel of the Trust other than Trustees and
officers may be entitled by contract or otherwise under law.

(D) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled to
indemnification under this Section 4.3, provided that either:

(i) such undertaking is secured by a surety bond or some other appropriate
security provided by the recipient or the Trust shall be insured against
losses arising out of any such advances; or

(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the matter)
or an independent legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.

As used in this Section 4.3, a "Disinterested Trustee" is one who is not (i) an
Interested Person of the Trust (including anyone who has been exempted from
being an Interested Person by any rule, regulation or order of the Commission),
or (ii) involved in the claim, action, suit or proceeding.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in
connection with the successful defense of any action suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy, as expressed in the Act and be governed by final
adjudication of such issue.

<PAGE>

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

See "Management of the Funds" in the Prospectus and Services of the Adviser and
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
- ---- ------- ----------------------

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 NWNL 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 Principal, TD
President - Associates Inc.
Chief
Investment
Officer,
Fixed Income

Ernest Mysogland Exec.Vice Vice President - Northstar Affiliated
President Investment Companies.
Chief
Investment
Officer -
Equities

Prescott Crocker Vice Vice President, Northstar Affiliated Invest-
President/ ment Cos. Former Vice President and Port-
Managing folio Manager for Boston Security
Director Counsellors, Inc.

<PAGE>

Margaret Patel Vice Vice President, Northstar Affiliate Invest-
President/ ment Cos. Former Vice President and Port-
Managing folio Manager for Boston Security
Director Cousellors, Inc.

Geoffrey Wadsworth Vice Vice President - Northstar Affiliated
President/ Investment Companies.
Investments
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 Northstar
President Affiliates and the Northstar Affiliated
and CFO Investment Companies.

Lisa M. Hurley Sr. Vice Executive Vice President, Northstar
President Administrators Corp., Vice President
General Counsel Northstar Distributors and Northstar
& Secretary Affiliated Investment Companies.

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

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

Mark Sfarra Vice Vice President - Northstar Distributors,
President - Inc.
Marketing

ITEM 29. PRINCIPAL UNDERWRITER

(a) See "Management of the Funds - The Adviser and Affiliated Service Providers"
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
otherwise indicated, the principal business address for each person is c/o
Northstar, Two Pickwick Plaza, Greenwich, CT 06830.

<PAGE>

(b) (1) (2) (3)
Name and Principal Position and Offices Position and Offices
Address with Underwriter with Registrant
- ------------------ -------------------- --------------------

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

Lisa Hurley Vice President Vice President
& Secretary & Secretary

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 Advantage

<PAGE>

Trust, and State Street Bank and Trust Co. maintains such records as Custodian
and Fund Accounting Agent for the Government Securities, High Yield, Strategic
Income, Income, Growth, and Special 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 Advantage 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>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certified that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933, and 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 27th day of February, 1996.

REGISTRANT

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

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.

SIGNATURES TITLE DATE

JOHN G. TURNER Chairman and February 27, 1996
John G. Turner* Trustee

MARK L. LIPSON Trustee February 27, 1996
Mark L. Lipson*

JOHN R. SMITH Trustee February 27, 1996
John R. Smith*

PAUL S. DOHERTY Trustee February 27, 1996
Paul S. Doherty*

DAVID W. WALLACE Trustee February 27, 1996
David W. Wallace*

ROBERT B. GOODE, JR. Trustee February 27, 1996
Robert B. Goode, Jr.*

ALAN L. GOSULE Trustee February 27, 1996
Alan L. Gosule*

DAVID W.C. PUTNAM Trustee February 27, 1996
David W.C. Putnam*

WALTER H. MAY, JR. Trustee February 27, 1996
Walter H. May, Jr.**

<PAGE>

SIGNATURES TITLE DATE

AGNES MULLADY Principal Financial February 27, 1996
Agnes Mullady and Accounting
Officer
By: LISA HURLEY*
Lisa Hurley
Attorney-in-fact

* Executed pursuant to powers of attorney filed with PEA No. 6 (Northstar
Advantage Trust and Northstar Advantage Strategic Income Fund), PEA No.10
(Northstar Advantage High Yield Fund), PEA No. 15 (Northstar Advantage
Government Securities Fund), and PEA No. 14 (Northstar Advantage Income Fund,
Northstar Advantage Special Fund and Northstar Advantage Growth Fund).

** Executed pursuant to a power of attorney filed herewith.

<PAGE>

INDEX TO EXHIBITS
-----------------
NORTHSTAR ADVANTAGE TRUST

Exhibit No. Under
Part C of Form N-1A Name of Exhibit Page Number Herein
- ------------------- --------------- ------------------

1 Form of Declaration of Trust

2 Form of By-Laws

5 Form of Advisory Agreement

6 (a) - (c) Form of Underwriting Agreement
for Class A, Class B, and Class C Shares

(d) Form of Dealer Agreement for
Northstar Affiliated Investment Companies

8 Form of Custody Agreement

9 (a) Form of Transfer Agency Agreement
(b) Form of Administration Agreement
(c) Form of Administrative Services
Agreement

10 Opinion of Counsel

11 Consent of Independent Accountants

15 (a) - (c) Form of Distribution and Service
Plan for Class A, Class B, and Class C Shares

17 Power of Attorney

27 Financial Data Schedule EX-27

<PAGE>

DECLARATION OF TRUST

NORTHSTAR ADVANTAGE TRUST

<PAGE>

DECLARATION OF TRUST
PAGE
----

ARTICLE I -- NAME AND DEFINITIONS 1

Section 1.1 Name 1
Section 1.2 Definitions 1

ARTICLE II -- TRUSTEES 3

Section 2.1 General Powers 3
Section 2.2 Investments 3
Section 2.3 Legal Title 4
Section 2.4 Issuance and Repurchase of Shares 6
Section 2.5 Delegation; Committees 6
Section 2.6 Collection and Payment 6
Section 2.7 Expenses 7
Section 2.8 Manner of Acting; By-Laws 7
Section 2.9 Miscellaneous Powers 7
Section 2.10 Principal Transactions 8
Section 2.11 Number of Trustees 8
Section 2.12 Election and Term 8
Section 2.13 Resignation and Removal 9
Section 2.14 Vacancies 9
Section 2.15 Delegation of Power to Other Trustees 10

ARTICLE III -- CONTRACTS 10

Section 3.1 Distribution Contract 10
Section 3.2 Advisory or Management Contract 10
Section 3.3 Administrator 11
Section 3.4 Transfer Agent and Shareholder Servicing Agents 11
Section 3.5 Affiliations of Trustees or Officers, Etc. 11
Section 3.6 Compliance with 1940 Act 12

ARTICLE IV -- LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES
AND OTHERS

Section 4.1 No Personal Liability of Shareholders, Trustees, Etc. 12
Section 4.2 Non-Liability of Trustees, Etc. 13
Section 4.3 Mandatory Indemnification 13
Section 4.4 No Bond Required of Trustees 15
Section 4.5 No Duty of Investigation;
<PAGE>

Notice in Trust Instruments, Etc. 15
Section 4.6 Reliance on Experts, Etc. 16

ARTICLE V -- SHARES OF BENEFICIAL INTEREST 16

Section 5.1 Beneficial Interest 16
Section 5.2 Rights of Shareholders 16
Section 5.3 Trust Only 17
Section 5.4 Issuance of Shares 17
Section 5.5 Register of Shares 17
Section 5.6 Transfer of Shares 17
Section 5.7 Notices, Reports 18
Section 5.8 Treasury Shares 18
Section 5.9 Voting Powers 19
Section 5.10 Meetings of Shareholders 19
Section 5.11 Series Designation 20
Section 5.12 Assent to Declaration of Trust 22
Section 5.13 Class Designation 22

ARTICLE VI -- REDEMPTION AND REPURCHASE OF SHARES 23

Section 6.1 Redemption of Shares 23
Section 6.2 Price 24
Section 6.3 Payment 24
Section 6.4 Effect of Suspension of Determination of Net
Asset Value 24
Section 6.5 Repurchase by Agreement 25
Section 6.6 Redemption of Sub-Minimum Accounts 25
Section 6.7 Redemption of Shares in Order to Qualify as
Regulated Investment Company; Disclosure of Holding 25
Section 6.8 Reductions in Number of Outstanding Shares Pursuant
to Net Asset Value Formula 26
Section 6.9 Suspension of Right of Redemption 26

ARTICLE VII -- DETERMINATION OF NET ASSET VALUE, NET INCOME
AND DISTRIBUTIONS

Section 7.1 Net Asset Value 26
Section 7.2 Distributions to Shareholders 27
Section 7.3 Determination of Net Income; Constant Net Asset
Value; Reduction of Outstanding Shares 28
Section 7.4 Allocation Between Principal and Income 29
Section 7.5 Power to Modify Foregoing Procedures 29

-ii-
<PAGE>

ARTICLE VIII -- DURATION; TERMINATION OF TRUST; AMENDMENT;
MERGERS, ETC. 29

Section 8.1 Duration 29
Section 8.2 Termination of Trust 29
Section 8.3 Amendment Procedures 30
Section 8.4 Merger, Consolidation and Sale of Assets 31
Section 8.5 Incorporation 31

ARTICLE IX -- REPORTS TO SHAREHOLDERS 32

ARTICLE X -- MISCELLANEOUS 32

Section 10.1 Filing 32
Section 10.2 Governing Law 33
Section 10.3 Counterparts 33
Section 10.4 Reliance by Third Parties 33
Section 10.5 Provisions in Conflict with Law or Regulations 33
Section 10.6 Principal Place of Business 34
Section 10.7 Resident Agent 34

-iii-
<PAGE>

DECLARATION OF TRUST
NORTHSTAR ADVANTAGE TRUST
(formerly NWNL Northstar Series Trust)

DECLARATION OF TRUST, made this 18th day of August, 1993 by the undersigned
Trustees (together with all other persons from time to time duly elected,
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, (the "Trustees");

WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and

WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest, as
hereinafter provided; and

NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of the holders, from time to time, of the shares of
beneficial interest issued hereunder, and subject to the provisions hereof.

ARTICLE I
NAME AND DEFINITIONS

SECTION 1.1. NAME. The name of the Trust created hereby is "Northstar
Advantage Trust" (formerly "NWNL Northstar Series Trust").

SECTION 1.2. DEFINITIONS. Wherever they are used herein the following
terms have the following respective meanings:

(a) "ADMINISTRATOR" means a party furnishing services to the Trust
pursuant to any contract described in Section 3.3 hereof.

(b) "BY-LAWS" means the By-laws referred to in Section 2.8 hereof, as
from time to time amended.

(c) "CLASS" means the two or more classes as may be established and
designated from time to time by the Trustees pursuant to Section 5.13 hereof.

(d) "COMMISSION" has the meaning given it in the 1940 Act. The term
"Interested Person" has the meaning given it in the 1940 Act, as modified by any
applicable order or orders of the Commission. Except as otherwise defined by
the Trustees in conjunction with the establishment of any series of Shares, the
term "VOTE OF A MAJORITY OF THE SHARES OUTSTANDING AND ENTITLED TO VOTE" shall
have the same meaning as the term "VOTE OF A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" given it in the 1940 Act.
<PAGE>

(e) "CUSTODIAN" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).

(f) "DECLARATION" means this Declaration of Trust as further amended from
time to time. Reference in this Declaration of Trust to "DECLARATION,"
"HEREOF," "HEREIN," AND "HEREUNDER" shall be deemed to refer to this Declaration
rather than exclusively to the article or section in which such words appear.

(g) "DISTRIBUTOR" means the party, other than the Trust, to the contract
described in Section 3.1 hereof.

(h) "HIS" shall include the feminine and neuter, as well as the masculine
genders.

(i) "INVESTMENT ADVISER" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.

(j) "MUNICIPAL BONDS" means obligations issued by or on behalf of states,
territories of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest from which
is exempt from regular Federal income tax.

(k) The "1940 ACT" means the Investment Company Act of 1940, as amended
from time to time.

(l) "PERSON" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.

(m) "SERIES" individually or collectively means the two or more Series as
may be established and designated from time to time by the Trustees pursuant to
Section 5.11 hereof. Unless the context otherwise requires, the term "Series"
shall include Classes into which shares of the Trust, or of a Series, may be
divided from time to time.

(n) "SHAREHOLDER" means a record owner of Outstanding Shares.

-2-
<PAGE>

(o) "SHAREHOLDER SERVICING AGENT" means a party furnishing services to the
Trust pursuant to any shareholder servicing contract described in Section 3.4
hereof.

(p) "SHARES" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to time,
including the Shares of any and all Series and Classes which may be established
by the Trustees, and includes fractions of Shares as well as whole Shares.
"OUTSTANDING SHARES" means those Shares shown from time to time on the books of
the Trust or its Transfer Agent as then issued and outstanding, but shall not
include Shares which have been redeemed or repurchased by the Trust and which
are at the time held in the treasury of the Trust.

(q) "Transfer Agent" means any one or more Persons other than the Trust
who maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like.

(r) "TRUST" means the Trust referred to in Section 1.1.

(s) "TRUSTEES" means the person or person who has or have signed this
Declaration, so long as he or they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, and reference herein to a Trustee or the Trustees shall refer to such
person or person in this capacity or their capacities as trustees hereunder.

(t) The "TRUSTEES" means the person or persons who has or have signed this
Declaration, so long as he or they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, and reference herein to a Trustee or the Trustees shall refer to such
person or persons in this capacity or their capacities as trustees hereunder.

ARTICLE II
TRUSTEES

SECTION 2.1. GENERAL POWERS. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain

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offices both within and without the Commonwealth of Massachusetts, in any and
all states of the United States of American, in the District of Columbia, and in
any and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as
they deem necessary, proper or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.

The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.

SECTION 2.2. INVESTMENTS. The Trustees shall have the power:

(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.

(b) To invest in, hold for investment, or reinvest in, securities,
including common and preferred stocks; warrants; bonds, debentures, bills, time
notes and all other evidences of indebtedness; negotiable or non-negotiable
instruments; any form of gold or other precious metal; commodity contracts;
shares of, or any other interest in, any investment company as defined in the
1940 Act; government securities, including securities of any state, municipality
or other political subdivision thereof, or any governmental or quasi-
governmental agency or instrumentality; and money market instruments including
bank certificates of deposit, finance paper, commercial paper, bankers
acceptances and all kinds of repurchase agreements, of any corporation, company,
trust, association, firm or other business organization however established, and
of any country, state, municipality or other political subdivision, or any
governmental or quasi-governmental agency or instrumentality; "when issued"
contracts for any such securities, contracts or interests; to retain Trust
assets in cash and from time to time to change the securities contracts or
interest in which the assets of the Trust are invested.

(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend, and to pledge any such securities, contracts or
interests, and to enter into repurchase agreements and forward foreign currency
exchange contracts, to purchase and sell futures contracts on securities,
securities indices and foreign currencies, to purchase or sell options on such
contracts, foreign currency contracts, and foreign currencies and to engage in
all types of hedging and risk management transactions.

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(d) To exercise all rights, powers and privileges of ownership or interest
in all securities, repurchase agreements, futures contracts and options and
other assets included in the Trust Property, including the right to vote thereon
and otherwise act with respect thereto and to do all acts for the preservation,
protection, improvement and enhancement in value of all such assets.

(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash, and any interest therein.

(f) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of any obligation or engagement of any other Person and to lend
Trust property.

(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest, and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.

(h) To enter into a plan of distribution and any related agreements
whereby the Trust may finance directly or indirectly any activity which is
primarily intended to result in the sale of Shares.

(i) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or Proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either along or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connection with the aforesaid business or
purposes, objects or powers.

The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.

The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investment which may be made by fiduciaries.

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SECTION 2.3. LEGAL TITLE. Legal title to all the Trust Property,
including the property of any Series of the Trust, shall be vested in the
Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other person as
nominee, on such terms as the Trustees may determine, provided that the interest
of the Trust therein is deemed appropriately protected. The right, title and
interest of the Trustees in the Trust Property and the property of each Series
of the Trust shall vest automatically in each Person who may hereafter become a
Trustee. Upon the termination of the term of office, resignation, removal or
death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property or the property of any Series of the
Trust, and the right, title and interest of such Trustee in the Trust Property
shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.

SECTION 2.4. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VI and VII and Section 5.11 hereof, to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the particular series of the
Trust with respect to which such Shares are issued, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporation.

SECTION 2.5. DELEGATION; COMMITTEES. the Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegations permitted by the 1940 Act.

SECTION 2.6. COLLECTION AND PAYMENT. The Trustees shall have the power
to collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.

SECTION 2.7 EXPENSES. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.

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Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.

SECTION 2.9. MISCELLANEOUS POWERS. Subject to Section 5.11 hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the
Trust; (b) enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property, insurance policies insuring the Shareholders,
the Administrator, Trustees, officers, employees, agents, investment advisers,
distributors, selected dealers or independent contractors of the Trust against
all claims arising by reason of holding any such position or by reason of any
action taken or omitted by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (e) establish pension, profit-
sharing, share purchase, and other retirement, incentive and benefit plans for
any Trustees, officers, employees and agents of the Trust; (f) to the extent
permitted by law, indemnify any person with whom the Trust has dealings,
including the Investment Adviser, Distributor, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust and the method by which its accounts shall be kept; and
(i) adopt a seal for the Trust, but the absence of such seal shall not impair
the validity of any instrument executed on behalf of the Trust.

SECTION 2.10. PRINCIPAL TRANSACTIONS. Except in transactions not
permitted by the 1940 Act or rules and regulations adopted by the Commission,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with the Investment Adviser, Distributor or
transfer agent or with any interested Person of such Person; and the Trust may
employ any such person, or firm or company in which such Person is an Interested
Person, as broker, legal counsel, registrar, transfer agent, dividend disbursing
agent or Custodian upon customary terms.

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SECTION 2.11. NUMBER OF TRUSTEES. The number of Trustees shall initially
be two (2), and thereafter shall be such number as shall be fixed from time to
time by a written instrument signed by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be more than fifteen
(15).

SECTION 2.12. ELECTION AND TERM. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.14 hereof, the Trustees shall
be elected by the Shareholders owning of record a plurality of the Shares voting
at a meeting of Shareholders. Such a meeting shall be held on a date fixed by
the Trustees. Except in the event of resignation or removals pursuant to
Section 2.13 hereof, each Trustee shall hold office until such time as less than
a majority of the Trustees holding office have been elected by Shareholders. In
such event the Trustees then in office will call a Shareholders' meeting for the
election of Trustees. Except for the foregoing circumstances, the Trustees
shall continue to hold office and may appoint successor Trustees.

SECTION 2.13. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than one) with cause, by
the action of two-thirds of the remaining Trustees. Any Trustee may be removed
at any meeting of Shareholders by vote of two-thirds of the Outstanding Shares
and, in that connection, the Trustees will assist shareholder communications to
the extent provided for in Section 16(c) under the 1940 Act. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
Trust Property or property of any series of the Trust held in the name of the
resigning or removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding sentence.

SECTION 2.14. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person

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named in the written instrument of appointment shall have accepted in writing
such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filed as provided in this Section 2.14, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees in office shall be conclusive evidence of the existence
of such vacancy.

SECTION 2.15. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not to exceed six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.

ARTICLE III
CONTRACTS

SECTION 3.1. DISTRIBUTION CONTRACT. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of the Shares at a price based on the net
asset value of a Share, whereby the Trustees may either agree to sell the Shares
to the other party to the contract or appoint such other party their sales agent
for the Shares, and in either case on such terms and conditions, if any, as may
be prescribed in the By-Laws, and such further terms and conditions as the
Trustees may in their discretion determine not inconsistent with the provisions
of this Article III or of the By-Laws; and such contract may also provide for
the repurchase of the Shares by such other party as agent of the Trustees. Such
contract may also further provide that such other party may enter into selected
dealer agreements with registered securities dealers to further the purpose of
the distribution or repurchase of the Shares. The foregoing services may be
provided by one or more persons.

SECTION 3.2. ADVISORY OR MANAGEMENT CONTRACT. The Trustees may in their
discretion from time to time enter into an investment advisory or management
contract or separate advisory contracts with respect to one or more Series
whereby the other party to such contract shall undertake to furnish to the Trust
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions as the Trustees may in their discretion determine, including the
grant of authority to such other party to determine what securities shall be
purchased or sold by the Trust and what portion of its assets shall be
uninvested, which authority shall include the power to make changes in the
investments of the Trust or any Series.

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The Trustees may also employ, or authorize the Investment Adviser to
employ, one or more sub-advisers from time to time to perform such of the acts
and services of the Investment Adviser and upon such terms and conditions as may
be agreed upon between the Investment Adviser and such sub-advisers and approved
by the Trustees. Any reference in this Declaration to the Investment Adviser
shall be deemed to include such sub-advisers unless the context otherwise
requires.

SECTION 3.3. ADMINISTRATOR. The Trustees may in their discretion from
time to time enter into one or more administrative services contracts whereby
the other party to each such contract shall undertake to furnish such
administrative services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more persons.

SECTION 3.4. TRANSFER AGENT AND SHAREHOLDER SERVICING AGENTS. The
Trustees may in their discretion from time to time enter into one or more
transfer agency contracts and one or more shareholder servicing contracts
whereby the other party to each such contract shall undertake to furnish such
transfer agency and/or shareholder services to the Trust as the Trustees shall
from time to time consider desirable and all upon such terms and conditions as
the Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of this Declaration or the
By-Laws. Such services may be provided by one or more Persons.

SECTION 3.5. AFFILIATIONS OF TRUSTEES OR OFFICERS, ETC.

The fact that:

(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholders, director, officer, partner, trustee, employee, manager,
adviser or distributor of or for any partnership, corporation, trust,
association or other organization or of or for any parent or affiliate of
any organization, with which a contract of the character described in
Sections 3.1, 3.2, 3.3 or 3.4 above or any Custodian contract as described
in Article X of the By-Laws, or for related services may have been or may
hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder of or has an interest in the Trust, or
that

(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in Sections
3.1, 3.2, 3.3 or 3.4 above or for services as Custodian or for related
services may have been or may hereafter be made also has any one or more of
such contracts with one or more other partnerships, corporations, trusts,
associations, or other organizations, or has other business or interests,

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shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.

SECTION 3.6. COMPLIANCE WITH 1940 ACT. Any contract entered into
pursuant to Sections 3.1 or 3.2, shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendment thereof or
other applicable act of Congress hereafter enacted), as modified by any
applicable order or orders of the Commission, with respect to its continuance in
effect, its termination and the method of authorization and approval of such
contract or renewal thereof.

ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OFFICERS

SECTION 4.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to the Trust or its
Shareholders, in connection with Trust property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such liability of the
Trust, he shall not, on account thereof, be held to any personal liability. The
Trust shall indemnify and hold each Shareholder harmless from and against all
claims and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability. The indemnification and reimbursement required by
the preceding sentence shall be made only out of the assets of the one or more
Series of which the Shareholder who is entitled to indemnification or
reimbursement was a Shareholder at the time the act or event occurred which gave
rise to the claim against or liability of said Shareholder. The rights accruing
to a Shareholder under this Section 4.1 shall not impair any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.

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SECTION 4.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of the duties involved in the conduct of his office.

SECTION 4.3. MANDATORY INDEMNIFICATION. (a) Subject to the exceptions
and limitations contained in paragraph (b) below:

(i) every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust to the fullest extent permitted by
law against all liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer and against
amounts paid or incurred by him in the settlement thereof; and

(ii) the words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened;
and the words "liability" and "expenses" shall include, without
limitation, attorneys fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.

(b) No indemnification shall be provided hereunder to a Trustee or officer:

(i) against any liability to the Trust, a Series thereof, or the
Shareholders by reason of a final adjudication by a court or other
body before which a proceeding was brought 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 the reasonable belief
that his action was in the best interest of the Trust; or

(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:

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(A) by the court or other body approving the settlement or other
disposition; or

(B) based upon a review of readily available facts (as opposed to a
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.

(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a person who has ceased to be such Trustee or officer and
shall inure to the benefit of the heirs, executors, administrators and assigns
of such a person. Nothing contained herein shall affect any rights to
indemnification to which personnel of the Trust other than Trustees and officers
may be entitled by contract or otherwise under law.

(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Section 4.3, provided that either:

(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust
shall be insured against losses arising out of any such advances;
or

(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees act on
the matter) or an independent legal counsel in a written opinion
shall determine, based upon a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason
to believe that the recipient ultimately will be found entitled
to indemnification.

As used in this Section 4.3, a "Disinterested Trustee" is one who is not
(i) an Interested Person of the Trust (including anyone who has been exempted
from being an Interested Person by any rule, regulation or order of the
Commission), or (ii) involved in the claim, action, suit or proceeding.

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SECTION 4.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated
to give any bond or other security for the Performance of any of his duties
hereunder.

SECTION 4.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC.
No purchaser, lender, transfer agent or other Person dealing with the Trustees
or any officer, employee or agent of the Trust shall be bound to make any
inquiry concerning the validity of any transaction purporting to be made by the
Trustees or by said officer, employee or agent or be liable for the application
of money or property paid, loaned, or delivered to or on the order of the
Trustees or of said officer, employee or agent. Every obligation, contract,
instrument, certificate, share, other security of the Trust or undertaking, and
every other act or thing whatsoever executed in connection with the Trust shall
be conclusively presumed to have been executed or done by the executors thereof
only in their capacity as officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate, share, other security of
the Trust or undertaking made or issued by the Trustees may recite that the same
is executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of the Trust under any such instrument are
not binding upon any of the Trustees or Shareholders individually, but bind only
the trust estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees individually. The Trustees shall at all times maintain insurance for
the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.

SECTION 4.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust by any of its officers or employees or by the Investment Adviser,
the Distributor, Transfer Agent, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or expert
may also be a Trustee.

ARTICLE V
SHARE OF BENEFICIAL INTEREST

SECTION 5.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest, all
of one class, except as provided in Section 5.11 and Section 5.13 hereof, par
value $0.1 per share. The number of shares of beneficial interest authorized
hereunder is unlimited. All shares issued hereunder including, without
limitation, shares issued in connection with a dividend in shares or a split of
shares, shall be fully paid and non-assessable.

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SECTION 5.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust Property
and the property of each Series of the Trust of every description and the right
to conduct any business hereinbefore described are vested exclusively in the
Trustees, and the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, and they shall have no right to
call for any partition or division of any property, profits, rights or interests
of the Trust nor can they be called upon to share or assume any losses of the
Trust nor can they suffer an assessment of any kind by virtue of their ownership
of Shares. The shares shall be personal property giving only the rights
specifically set forth in this Declaration. The shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any Series of Shares.

SECTION 5.3. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or member of a
joint stock association.

SECTION 5.4. ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury. The Trustees may from time
to time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole Shares and/or 1/1,000ths of a Share or integral multiples thereof.

SECTION 5.5. REGISTER OF SHARES. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who shall be
entitled to receive dividends or distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or in
the By-Laws provided, until he has given his address to the Transfer Agent or
such other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for the
Shares; however, the Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use.

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SECTION 5.6. TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Transfer Agent of a duly executed instrument of
transfer, together with such evidence of the genuineness of each such execution
and authorization and of other matter as may reasonably be required. Upon such
delivery the transfer shall be recorded on the register of the Trust. Until such
record is made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereunder and neither the Trustees nor any transfer
agent or registrar nor any officer, employee or agent of the Trust shall be
affected by any notice of the proposed transfer.

Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.

SECTION 5.7. NOTICES, REPORTS. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the register of the Trust. A
notice of a meeting, an annual report and any other communication to
Shareholders need not be sent to a Shareholder (i) if an annual report and a
proxy statement for two consecutive shareholder meetings have been mailed to
such Shareholders address and have been returned as undeliverable, (ii) if all,
and at least two, checks (if sent by first class mail) in payment of dividends
on Shares during a twelve-month period have been mailed to such Shareholder's
address and have been returned as undeliverable or (iii) in any other case in
which a proxy statement concerning a meeting of security holders is not required
to be given pursuant to the Commissions proxy rules as from time to time in
effect under the Securities Exchange Act of 1934. However, delivery of such
proxy statements, annual reports and other communications shall resume if and
when such Shareholder delivers or cause to be delivered to the Trust written
notice setting forth such Shareholder's then current address.

SECTION 5.8. TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.

SECTION 5.9. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.12; (ii) for the
removal of Trustees as provided in

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Section 2.13; (iii) with respect to any investment advisory or management
contract entered into pursuant to Section 3.2; (iv) with respect to termination
of the Trust as provided in Section 8.2; (v) with respect to any amendment of
this Declaration to the extent and as provided in Section 8.3; (vi) with respect
to any merger, consolidation or sale of assets as provided in Section 8.4; (vii)
with respect to incorporation of the Trust or any Series to the extent and as
provided in Section 8.5; (viii) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be bought or maintained derivitavely or
as a class action on behalf of the Trust or any Series or Class thereof or the
Shareholders (provided, however, that a Shareholder of a particular Series or
Class shall not be entitled to a derivative or class action on behalf of any
other Series or Class (or Shareholder of any other Series or Class) of the
Trust); (ix) with respect to any plan adopted pursuant to Rule12b-1 (or any
successor rule) under the 1940 Act; and (x) with respect to such additional
matters relating to the Trust as may be required by this Declaration, the By-
Laws or any registration of the Trust as an investment company under the 1940
Act with the Commission (or any successor agency) or as the Trustees may
consider necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote, except that the Trustees may, in
conjunction with the establishment of any Series or Class of Shares, establish
or reserve the right to establish conditions under which the several Series or
Classes shall have separate voting rights or, if a Series or Class would not, in
the sole judgment of the Trustees, be materially affected by a proposal, no
voting rights. There shall be no cumulative voting in the election of Trustees.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration or the By-laws to be
taken by Shareholders. The By-laws may include further provisions for
Shareholders votes and meetings and related matters.

SECTION 5.10. MEETINGS OF SHAREHOLDERS. Meetings of Shareholders may be
called at any time by the President, and shall be called by the President and
Secretary at the request in writing or by resolution, of a majority of Trustees,
or at the written request of the holder or holders of ten percent (10%) or more
of the total number of Shares then issued and outstanding of the Trust entitled
to vote at such meeting. Any such request shall state the purpose of the
proposed meeting. At any meeting of Shareholders of the Trust or of any series
of the Trust, a Shareholder Servicing Agent may vote any shares as to which such
Shareholder Servicing Agent is the Agent of record and which are not otherwise
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all shares otherwise represented at the
meeting in person or by proxy as to which such Shareholder Servicing Agent is
the agent of record. Any shares so voted by a Shareholder Servicing Agent will
be deemed represented at the meeting for quorum purposes.

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SECTION 5.11. SERIES DESIGNATION. The Trustees, in their discretion, may
authorize the division of Shares into two or more Series, and the different
Series shall be established and designated, and the variations in the relative
rights and preferences as between the different Series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different Series as
to investment objective, purchase price, allocation of expenses, right of
redemption, special and relative rights, and conditions under which the several
Series shall have separate voting rights. All references to Shares in this
Declaration shall be deemed to be Shares of any or all series as the context may
require.

If the Trustees shall divide the Shares of the Trust into two or more
Series, the following provisions shall be applicable:

(a) All provisions herein relating to the Trust shall apply equally to
each Series of the Trust except as the context requires otherwise.

(b) The number of authorized Shares and the number of Shares of each
Series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series into one or more Series that may be established and designated from
time to time. The Trustees may hold as treasury Shares (of the same or some
other Series), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any Series reacquired by the Trust at their
discretion from time to time.

(c) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors of such Series and except as may otherwise be required by
applicable laws, and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income, earnings, profits, and
proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series, the Trustees shall allocate them among any
one or more of the Series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and binding
upon the shareholders of all Series for all purposes.

(d) The assets belonging to each particular Series shall be charged with
the liabilities of the Trust in respect of that Series and all expenses, costs,
charges and reserves attributable to

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that Series, and any general liabilities, expenses, costs charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Series shall be allocated and charged by the Trustees to and among any one or
more of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the Shareholders
of all Series for all purposes. The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items are capital;
and each such determination and allocation shall be conclusive and binding upon
the Shareholders. The assets of a particular Series of the Trust shall, under
no circumstances, be charged with liabilities attributable to any other Series
of the Trust. All persons extending credit to, or contracting with or having
any claim against a particular Series of the Trust shall look only to the assets
of that particular Series for payment of such credit, contract or claim. No
Shareholder or former Shareholder of any Series shall have any claim on or right
to any assets allocated or belonging to any other series.

(e) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of distributions of income and
capital gains made with respect to such Series. Upon redemption of his Shares
or indemnification for liabilities incurred by reason of his being or having
been a Shareholder of a Series, such shareholder shall be paid solely out of the
funds and property of such Series of the Trust. Upon liquidation or termination
of a Series of the Trust, Shareholders of such Series shall be entitled to
receive a pro rata share of the net assets of such Series. A Shareholder of a
particular Series of the Trust shall not be entitled to participate in a
derivative or class action on behalf of any other Series or the Shareholders of
any other Series of the Trust.

(f) The establishment and designation of any Series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Series, or as otherwise provided in such instrument. The
Trustees may by an instrument executed by a majority of their number abolish any
Series and the establishment and designation thereof. Except as otherwise
provided in this Article V, the Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights, of each class and
Series of Shares. Each instrument referred to in this paragraph shall have the
status of an amendment to his Declaration.

SECTION 5.12. ASSENT TO DECLARATION OF TRUST. Every Shareholder, by
virtue of having become a shareholder, shall be held to have expressly assented
and agreed to the terms hereof and to have become a party hereto.

SECTION 5.13. CLASS DESIGNATION. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into

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two or more Classes, and the different Classes shall be established and
designated, and the variations in the relative rights and preferences as between
the different Classes shall be fixed and determined, by the Trustees; provided,
that all Shares of the Trust or of any Series shall be identical to all other
Shares of the Trust or the same Series, as the case may be, except that there
may be variations between different classes as to allocation of expenses, right
of redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Classes shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all Classes as the context may require.

If the Trustees shall divide the Shares of the Trust or any Series into two
or more Classes, the following provisions shall be applicable:

(a) All provisions herein relating to the Trust, or any Series of the
Trust, shall apply equally to each class of Shares of the Trust or of any Series
of the Trust, except as the context requires otherwise.

(b) The number of Shares of each Class that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued Shares of the
Trust or any Series or any Shares previously issued and reacquired of any Class
of the Trust or of any Series into one or more Classes that may be established
and designated from time to time. The Trustees may hold as treasury Shares (of
the same or some other class), reissue for such consideration and on such terms
as they may determine, or cancel any Shares of any Class reacquired by the Trust
at their discretion from time to time.

(c) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be allocated
to, the Shares of a particular Class may be charged to and borne solely by such
Class and the bearing of expenses solely by a Class of Shares may be
appropriately reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of different Classes. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Classes for all purposes.

(d) The establishment and designation of any Class of Shares shall be
effective upon the execution of a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Class, or as otherwise provided in such instrument. The
Trustees may, by an instrument executed by a majority of their number, abolish
any Class and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration.

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ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES

SECTION 6.1. REDEMPTION OF SHARES. All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust.

The Trust shall redeem the Shares upon the appropriately verified written
application of the record holder thereof (or upon such other form of request as
the Trustees may determine) at the office of the Transfer Agent, the Shareholder
Servicing Agent, which is the agent of record for such Shareholder, or at the
office of any bank or trust company, either in or outside the office of any bank
or trust company, either in or outside the Commonwealth of Massachusetts, which
is a member of the Federal Reserve System and which the said Transfer Agent or
the said Shareholder Servicing Agent has designated for that purpose, or at such
office or agency as may be designated from time to time in the Trust's then
effective registration statement under the Securities Act of 1933. The Trustees
may from time to time specify additional conditions, not inconsistent with the
1940 Act, regarding the redemption of Shares in the Trust's then effective
registration statement under the Securities Act of 1933.

SECTION 6.2. PRICE. Shares shall be redeemed at their net asset value
determined as set forth in Section 7.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 7.1 hereof after
receipt of such application.

SECTION 6.3. PAYMENT. Payment for such Shares shall be made in cash or
in property out of the assets of the relevant series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement under the Securities Act of 1933,
subject to the provisions of Section 6.4 hereof.

SECTION 6.4. EFFECT OF SUSPENSION OF DETERMINATION OF NET ASSET VALUE.
If, pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of
the determination of net asset value, the rights of Shareholders (including
those who shall have applied for redemption pursuant to Section 6.1 hereof but
who shall not yet have received payment) to have Shares redeemed and paid for by
the Trust shall be suspended until the termination of such suspension is
declared. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke any
application for redemption not honored and withdraw any

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certificates on deposit. The redemption price of Shares for which redemption
applications have not been revoked shall be the net asset value of such
Shares next determined as set forth in Section 7.1 after the termination of
such suspension, and payment shall be made within seven (7) days after the
date upon which the application was made plus the period after such
application during which the determination of net asset value was suspended.

SECTION 6.5. REPURCHASE BY AGREEMENT. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the purpose
by agreement with the owner thereof at a price not exceeding the net asset value
per share determined as of the time when the purchase or contract of purchase is
made or the net asset value as of any time which may be later determined
pursuant to Section 7.1 hereof, provided payment is not made for the Shares
prior to the time as of which such net asset value is determined.

SECTION 6.6 REDEMPTION OF SUB-MINIMUM ACCOUNTS. The Trust shall have
the right at any time without prior notice to the shareholder to redeem shares
of any shareholder for their then current net asset value per share if at such
time the shareholder owns shares having an aggregate net asset value of less
than an amount set forth from time to time by the Trustees, subject to such
terms and conditions as the Trustees may approve, and subject to the Trust's
giving general notice to all shareholders of its intention to avail itself of
such right, either by publication in the Trust's registration statement, if any,
or by such other means as the Trustees may determine.

SECTION 6.7. REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATION
INVESTMENT COMPANY; DISCLOSURE OF HOLDING. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of Shares
or other securities of the Trust has or may become concentrated in any Person to
an extent which would disqualify any Series of the Trust as a regulated
investment company under the Internal Revenue Code, then the Trustees shall have
the power by lot or other means deemed equitable by them (i) to call for
redemption by any such Person a number, or principal amount, of Shares or other
securities of the Trust sufficient to maintain or bring the direct or indirect
ownership of Shares or other securities of the Trust into conformity with the
requirements for such qualification, and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose acquisition of the
Shares or other securities of the Trust in question would result in such
disqualification. The redemption shall be effected at the redemption price and
in the manner provided in Section 6.1.

The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other taxing authority.

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SECTION 6.8. REDUCTIONS IN NUMBER OF OUTSTANDING SHARES PURSUANT TO NET
ASSET VALUE FORMULA. The Trust may also reduce the number of Outstanding Shares
pursuant to the provisions of Section 7.3.

SECTION 6.9. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary week-end and holiday closings,
(ii) during which trading on the New York Stock Exchange is restricted, (iii)
during which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(iv) during any other period when the Commission may for the protection of
Shareholders of the Trust by order permit suspension of the right of redemption
or postponement of the date of payment or redemption; provided that applicable
rules and regulations of the Commission shall govern as to whether the
conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall take
effect at such time as the Trust shall specify but not later than the close of
business on the business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment on redemption until
the Trust shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange shall
have reopened or the Period specified in (ii) or (iii) shall have expired (as to
which in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.

ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS

SECTION 7.1. NET ASSET VALUE. The value of the assets of the Trust or
any Series of the Trust shall be determined by appraisal of the securities of
the Trust or allocated to such Series, such appraisal to be on the basis of the
amortized cost of such securities in the case of money market securities, market
value in the case of other securities, or by such other method as shall be
deemed to reflect the fair value thereof, determined in good faith by or under
the direction of the Trustees. From the total value of said assets, there shall
be deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits, expenses and management charges
accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities attributable to
the Trust or such Series or Class thereof which shall be

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determined by dividing the net asset value of the Class, or, if no Class has
been established, of the Series, or if no Series has been established, of the
Trust, as applicable, outstanding. The net asset value of Shares of the Trust
or any Class or Series of the Trust shall be determined pursuant to the
procedure and methods prescribed or approved by the Trustees in their discretion
and as set forth in the most recent Registration Statement of the Trust as filed
with the Securities and Exchange Commission pursuant to the requirements of the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and the Rules thereunder. The net asset value of the Shares shall be
determined at least once on each business day, as of the close of trading on the
New York Stock Exchange or as of such other time or times as the Trustees shall
determine. The power and duty to make the daily calculations may be delegated
by the Trustees to the Investment Adviser, the custodian, the Transfer Agent or
such other person as the Trustees may determine by resolution or by approving a
contract which delegates such duty to another Person. The Trustees may suspend
the daily determination of net asset value to the extent permitted by the 1940
Act.

SECTION 7.2. DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or a Series
such proportion of the net profits, surplus (including paid-in surplus),
capital, or assets of the Trust or such Series held by the Trustees as they may
deem proper. Such distributions may be made in cash or property (including
without limitation any type of obligations of the Trust or such Series or any
assets thereof), and the Trustees may distribute ratably among the Shareholders
additional Shares of the Trust or such Series issuable hereunder in such manner,
at such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such other date or time or
dates or times as the Trustees shall determine. To the extent the Trustees deem
it appropriate as a matter of administrative convenience, distributions to
Shareholders may be effected on different dates to different Shareholders,
provided that such distributions shall be made at regularly occurring intervals
of approximately the same length with respect to each Shareholder of the Trust.
The Trustees may in their discretion determine that, solely for the purposes of
such distributions, outstanding shares shall exclude shares for which orders
have been placed subsequent to a specified time on the date the distribution is
declared or on the preceding day if the distribution is declared as of a day on
which Boston banks are not open for business, all as described in the
registration statement under the Securities Act of 1933. The Trustees may
always retain from the net profits such amount as they may deem necessary to pay
the debts or expenses of the Trust or the Series or to meet obligations of the
Trust or the Series, or as they may deem desirable to use in the conduct of its
affairs or to retain for future requirements or extensions of the business. The
Trustees may adopt and offer to Shareholders such dividend reinvestment Plans,
cash dividend payout plans or related plans as the Trustees shall deem
appropriate.

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Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or the Series to avoid or reduce liability for taxes.

SECTION 7.3. DETERMINATION OF NET INCOME; CONSTANT NET ASSET VALUE;
REDUCTION OF OUTSTANDING SHARES. Subject to Section 5.11 hereof, the net income
of the Trust or any Series shall be determined in such manner as the Trustees
shall provide by resolution. Expenses of the Trust or a Series, including the
advisory or management fee and service fees, shall be accrued each day. Such
net income may be determined by or under the direction of the Trustees as of the
close of trading on the New York Stock Exchange on each day on which such
Exchange is open or as of such other time or times as the Trustees shall
determine, and, except as provided therein, all the net income of the Trust or
any Series, as so determined, may be declared as a dividend on the Outstanding
Shares of the Trust or such Series. If for any reason, the net income of the
Trust or any Series, determined at any time is a negative amount, the Trustees
shall have the power with respect to the Trust or such Series (i) to offset each
Shareholder's pro rata shares of such negative amount from the accrued dividend
account of such Shareholder, or (ii) to reduce the number of Outstanding Shares
of the Trust or such Series by reducing the number of Shares in the account of
such Shareholder by that number of full and fractional Shares which represents
the amount of such excess negative net income, or (iii) to cause to be recorded
on the books of the Trust or such Series an asset account in the amount of such
negative net income, which account may be reduced by the amount, provided that
the same shall thereupon become the property of the Trust or such Series with
respect to the Trust or such Series and shall not be paid to any Shareholder, of
dividends declared thereafter upon the Outstanding Shares of the Trust or such
Series on the day such negative net income is experienced, until such asset
account is reduced to zero, or (iv) to combine the methods described in clauses
(i) and (ii) and (iii) of this sentence, in order to cause the net asset value
per shares of the Trust or such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration.
The Trustees shall also have the power to fail to declare a dividend out of net
income for the purpose of causing the net asset value per share to be increased
to a constant amount. The Trustees shall not be required to adopt, but may at
any time adopt, discontinue or amend the practice of maintaining the net asset
value per Shares of the Trust or a Series at a constant amount.

SECTION 7.4. ALLOCATION BETWEEN PRINCIPAL AND INCOME. The Trustees shall
have full discretion to determine whether any cash or property received shall be
treated as income or as principal and whether any item of expense shall be
charged to the income or the principal account, and their determination made in
good faith shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to determine, in the
light of the particular circumstances, how much if any of the value thereof
shall be treated as income, the balance, if any, to be treated as principal.

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SECTION 7.5. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable.

ARTICLE VIII

DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.

SECTION 8.1. DURATION. The Trust shall continue without limitation of
time but subject to the provisions of this Article VIII.

SECTION 8.2. TERMINATION OF TRUST. (a) The Trust or any Series of the
Trust may be terminated by an instrument writing signed by a majority of the
Trustees, or by the affirmative vote of the holders a majority of the Shares of
the Trust or Series outstanding and entitled to vote, at any meeting of
Shareholders. Upon the termination of the Trust or any Series,

(i) The Trust or any Series shall carry on no business except for the
purpose of winding up its affairs;

(ii) The Trustees shall proceed to wind up the affairs of the Trust or
Series and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust or Series shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or
Series, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property or property
of the Series to one or more persons at public or private sale for consideration
which may consist in whole or in part of cash, securities or other property of
any kind, discharge or pay its liabilities, and do all other acts appropriate to
liquidate its business; and

(iii) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or property of the Series, in cash or in
kind or partly each, among the Shareholders of the Trust or Series according to
their respective rights.

(b) After termination of the Trust or any Series and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties hereunder, and the rights and interests of
all Shareholders of the Trust or Series shall thereupon cease.

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<PAGE>

SECTION 8.3. AMENDMENT PROCEDURE. (a) This Declaration may be amended by
a vote of the holders of a majority of the Shares outstanding and entitled to
vote. Amendments shall be effective upon the taking of action as provided in
this section or at such later time as shall be specified in the applicable vote
or instrument. The Trustees may also amend this Declaration without the vote or
consent of Shareholders if they deem it necessary to conform this Declaration to
the requirements of applicable federal or state laws or regulations or the
requirements of the regulated investment company provisions of the Internal
Revenue Code (including those provisions of such Code relating to the retention
of the exemption from federal income tax with respect to dividends paid by the
Trust out of interest income received on Municipal Bonds), but the Trustees
shall not be liable for failing so to do. The Trustees may also amend this
Declaration without the vote or consent of Shareholders if they deem it
necessary or desirable to change the name of the Trust or to make any other
changes in the Declaration which do not materially adversely affect the rights
of Shareholders hereunder.

(b) No amendment may be made under this Section 8.3 which would change any
rights with respect to any Shares of the Trust or Series by reducing the amount
payable thereon upon liquidation of the Trust or Series or by diminishing or
eliminating any voting rights pertaining thereto, except with the vote or
consent of the holders of two-thirds of the Shares of the Trust or Series
outstanding and entitled to vote. Noting contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.

(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.

Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.

SECTION 8.4. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or the property of any Series, including its good
will, upon such terms and conditions and for such consideration when and as
authorized at any meeting of Shareholders of the Trust or Series called for the
purpose by the affirmative vote of the holders of a majority of the Shares of
the Trust or Series.

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<PAGE>

SECTION 8.5. INCORPORATION. With the approval of the holders of a
majority of the Shares of the Trust or any Series outstanding and entitled to
vote, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all of the
Trust Property or the property of any Series or to carry on any business sin
which the Trust or the Series shall directly or indirectly have any interest,
and to sell, convey and transfer the Trust Property or the property of any
Series to any such corporation, trust, association or organization, or any
corporation, partnership, trust, association or organization in which the Trust
or the Series holds or is about to acquire shares or any other interest. The
Trustees may also cause a merger or consolidation between the Trust or any
Series or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.

ARTICLE IX
REPORTS TO SHAREHOLDERS

The Trustees shall at least semi-annually submit to the Shareholders a
written financial report, which may be included in the Trust's prospectus or
statement of additional information, of the transactions of the Trust, including
financial statements which shall at least annually be certified by independent
public accountants.

ARTICLE X
MISCELLANEOUS

SECTION 10.1. FILING. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Unless the amendment is embodied in an instrument signed by a majority of the
Trustees, each amendment filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was duly taken in a manner
provided herein. A restated Declaration, integrating into a single instrument
all of the provisions of the Declaration which are then in effect and operative,
may be executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may hereafter be referred to in
lieu of the original Declaration and the various amendments thereto. The
restated Declaration may include any amendment which the Trustees are empowered
to adopt, whether or not such amendment has been adopted prior to the execution
of the restated Declaration.

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<PAGE>

SECTION 10.2. GOVERNING LAW. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
internal laws thereof, and the rights of all parties and the validity and
construction of very provision hereof shall be subject to and construed
according to the internal laws of said State without regard to the choice of law
rules thereof.

SECTION 10.3. COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.

SECTION 10.4. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any person dealing with the
Trustees and their successors.

SECTION 10.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.

(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration or jurisdiction.

SECTION 10.6. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Trust is Two Pickwick Plaza, Greenwich, CT 06830. The principal
place of business may be changed by resolution of a majority of the Trustees.

SECTION 10.7. RESIDENT AGENT. The Trust shall maintain a resident agent
in the Commonwealth of Massachusetts, which agent shall initially be CT
Corporation System, 2 Oliver Street, Boston, MA 02109. The Trustees may
designate a successor resident agent, provided, however, that such appointment
shall not become effective until written notice thereof is delivered to the
office of the Secretary of the Commonwealth.

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<PAGE>

IN WITNESS WHEREOF, the undersigned has executed this instrument this 18th
day of August.

__________________________________
(as Trustee and not individually)
Ten Post Office Square, Suite 1230
Boston, MA 02109

___________________________________
(as Trustee and not individually)
Ten Post Office Square, Suite 1230
Boston, MA 02109

COMMONWEALTH OF MASSACHUSETTS

SS. August 18, 1993

Then personally appeared the above named ______________________ and ___________
_________________ who acknowledge the foregoing instrument to be their free act
and deed.

Before me,

_______________________________
Notary Public

My commission expires:

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<PAGE>

BY-LAWS OF NORTHSTAR ADVANTAGE TRUST

ARTICLE I

DEFINITIONS

The terms "Administrator", "Class", "Commission", "Custodian", "Declaration",
"Distributor", "His", "Interested Person", "Investment Adviser", "Municipal
Bonds", "1940 Act", "Person", "Series", "Shareholder", "Shareholder Servicing
Agent", "Shares", "Transfer Agent", "Trust", "Trust Property", "Trustees", and
"vote of a majority of the shares outstanding and entitled to vote", have the
respective meanings given them in the Declaration of Trust - Northstar Series
Trust dated August 18, 1993, as amended from time to time.

ARTICLE II
RESIDENT AGENT/OFFICES

SECTION 1. RESIDENT AGENT. The Trust shall maintain a resident agent in
the Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may
designate a successor resident agent, provided, however, that such appointment
shall not become effective until written notice thereof it delivered to the
office of the Secretary of the Commonwealth.

SECTION 2. OFFICES. The Trust may have its principal office and other
offices in such places without as well as within the Commonwealth of
Massachusetts as the Trustees may from time to time determine.

ARTICLE III
SHAREHOLDERS

SECTION 1. MEETINGS. A meeting of Shareholder may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request, which shall specify the purpose or purposes for which such meeting is
to be called, of Shareholders holding in the aggregate not less than 10% of the
outstanding shares entitled to vote on the matters specified in such written
request. Any such meeting shall be held as provided in the Declaration at such
place within or without the Commonwealth of Massachusetts as the Trustees shall
designate. The holders of a majority of outstanding shares present in person or
by proxy shall constitute a quorum at any meeting of the Shareholders. In the
absence of a quorum, a majority of outstanding shares entitled to vote present
in person or by proxy may adjourn the meeting from time to time until a quorum
shall be present.

SECTION 2. NOTICE OF MEETINGS. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail to each Shareholder at his address as recorded on
the register of the Trust mailed at least (10) days and
<PAGE>

not more than sixty (60) days before the meeting. Only the business sated in
the notice of the meeting shall be considered at such meeting. Any adjourned
meeting may be held as adjourned without further notice. No notice need be to
any Shareholder who shall have failed to inform the Trust of his current address
or if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.

SECTION 3. RECORD DATE FOR MEETINGS AND OTHER PURPOSES. For the purpose
of determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than
sixty (60) days prior to the date of any meeting of Shareholders or distribution
or other action as a record date for the determinations of the persons to be
treated as Shareholders of record for such purposes, except for dividend
payments which shall be governed by the Declaration.

SECTION 4. PROXIES. At any meeting of Shareholders, any holder of Shares
entitled to vote threat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent for the Trust as the Secretary
may direct, for verification prior to the time at which such vote shall be
taken. Proxies may be solicited in the name of one or more Trustees or one or
more of the officers of the Trust. Only Shareholders of record shall be
entitled to vote. Each whole shares shall be entitled to one vote as to any
matter on which it is entitled by the Declaration to vote, and each fractional
share shall be entitled to a proportionate fractional vote. When any Shares is
held jointly by several persons, any one of them may vote at any meeting in
person or by proxy in respect of such Share, but if more than one of them shall
be present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Share. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise, and the burden of proving invalidity shall rest on the challenger.
If the holder of any such share is a minor or a person of unsound mind, and
subject to guardianship or the legal control of any other person as regards the
charge or management of such shares, he may vote by his guardian or such other
person appointed or having such control, and such vote may be given in person or
by proxy.

SECTION 5. INSPECTION OF RECORDS. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted shareholders of
a Massachusetts business corporation.

SECTION 6. ACTION WITHOUT MEETING. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consents shall be treated for all
purposes as a vote taken at a meeting of Shareholders.

2
<PAGE>

ARTICLE IV
TRUSTEES

SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, or by any one
of the Trustees, at the time being in office. Notice of meetings shall be given
by the Secretary or an Assistant Secretary or by the officer or Trustees called
the meeting and shall be mailed to each Trustee at least two days before the
meeting, or shall be telegraphed, cabled, or wirelessed to each Trustee at his
business address, or personally delivered to him at least one day before the
meeting. Such notice may, however, be waived by any Trustee. Notice of a
meeting need not be given to any Trustee if a written waiver of notice, executed
by him before or after the meeting, is filed with the records of the protesting
prior thereto or at its commencement the lack of notice to him. A notice or
waiver of notice need not specify the purpose of any meeting. The Trustees may
meet by means of a telephone conference circuit or similar communications
equipment by means of which all persons participating in the meeting shall be
deemed to have been held at a place designated by the Trustees at the meeting.
Participation in a telephone conference meeting shall constitute presence in
person at such meeting. Any action required or permitted to be taken by the
Trustees without a meeting if all the Trustees consent to the action in writing
and the written consents are filed with the records of the Trustees meetings.
Such consents shall be treated as a vote for all purposes.

SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees shall
be present in person at any regular or special meeting of the Trustees in order
to constitute a quorum for the transaction of business at such meeting and
(except as otherwise required by law, the Declaration of these By-Laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
quorum shall be present. Notice of an adjourned meeting need not be given.

ARTICLE V
COMMITTEES

SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust, and such other powers of the
Trustees as the Trustees may, from time to time, delegate to them except those
powers which by law, the Declaration or these By-Laws they are prohibited from
delegating. The Trustees may also elect from their own number other Committees
from time to time, the number composing such Committees, the powers conferred
upon the same (subject to the same limitations as with respect to the Executive
Committee) and the term of membership on such Committees to be determined by the
Trustees.

3
<PAGE>

The Trustees may designate a chairman of any such Committee. In the absence of
such designation the Committee may elect its own Chairman.

SECTION 2. MEETINGS, QUORUM AND MANNER OF ACTING. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.

The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the office of the Trust.

SECTION 3. CHAIRMAN. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successors shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder.
The Chairman shall preside at all meetings of the Trustees and shall have such
other duties as from time to time may be assigned to him by the Trustees.

ARTICLE VI
OFFICERS

SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as
the business of the Trust may require, including one or more Vice Presidents,
one or more Assistant Secretaries, and one or more Assistant Treasurers. The
Trustees may delegate to any officer or committee the power to appoint any
subordinate officers or agents.

SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall each hold office until his successor shall have been
duly elected and qualified, and all other officers shall hold office at the
please of the Trustees. The Secretary and Treasurer shall not be held by the
same person. The President shall hold no other office. Except as above
provided, any two offices may be held by the same person. Any officer may be but
none need be a Trustee or Shareholder.

SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer without cause, by a vote of a majority of
the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointment officer or
committee.

4
<PAGE>

SECTION 4. POWERS AND DUTIES OF THE PRESIDENT. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control
of the Trustees and to the control of any Committees of the Trustees, within
their respective spheres, as provided by the Trustees, he shall at all times
exercise a general supervision and direction over the affairs of the Trust. He
shall have the power to employ attorneys and counsel for the Trust and to employ
such subordinate officers, agents, clerks and employees as he may find necessary
to transact the business of the Trust. He shall also have the power to grant,
issue, execute or sign such powers of attorney, proxies or other documents as
may be deemed advisable or necessary in furtherance of the interest of the
Trust. The President shall have such other powers and duties, as from time to
time may be conferred upon or assigned to him by the Trustees.

SECTION 5. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any other powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.

SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be the
principal financial and accounting officer of the Trust. he shall deliver all
funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ pursuant to Article X of these By-Laws. He shall render a
statement of condition of the finances of the Trust to the Trustees as often as
they shall require the same and he shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required so to do by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.

Section 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provided for that purpose; he shall have custody of the seal of the Trust
he shall have charge of the Share transfer books, lists and records unless

<PAGE>

NWNL NORTHSTAR SERIES TRUST
INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 8th day of November 1993, by and between NWNL NORTHSTAR
SERIES TRUST, a Massachusetts business trust, (the "Trust") and NORTHSTAR
INVESTMENT MANAGEMENT CORP., a Delaware business corporation (the "Adviser").

The Trust is an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
consisting of four separate diversified series, NWNL Northstar High Yield Bond
Fund, NWNL Northstar Multi-Sector Bond Fund, NWNL Northstar Growth Fund, and
NWNL Northstar Income and Growth Fund (each "Fund" and collectively the
"Funds").

The Trust desires to retain the Adviser to render investment advisory
services to the Funds, and the Adviser is willing to render such investment
advisory on the terms set forth below.

The parties agree as follows:

1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust and the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services described, for the compensation provided, in this Agreement.

2. Subject to the supervision of the Trustees, the Adviser shall manage
the investment operations of the Funds and the composition of each Fund's
portfolio, including the purchase and retention and disposition of portfolio
securities, in accordance with each Fund's investment objectives, policies and
restrictions as stated in the Trust's Prospectus and Statement of Additional
Information (as defined below) subject to the following understandings:

(a) The Adviser shall provide supervision of each Fund's investments and
determine from time to time what investments will be made, held or disposed of
or what securities will be purchased and retained, sold or loaned by each Fund,
and what portion of the assets will be invested or held uninvested as cash.

(b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement.

(c) The Adviser, in the performance of its duties and obligations under
this Agreement, shall (i) act in conformity with the Declaration of Trust, By-
Laws, Prospectus and Statement of Additional Information of the Trust, with the
instructions and directions of the Trustees and (ii) conform to and comply with
the requirements of the Investment Company Act and all other applicable federal
and state laws and regulations.

(d) (i) The Adviser shall determine the securities to be purchased or sold
by each Fund and will place orders pursuant to its determinations with or
through such persons, brokers or dealers to carry out the policy with respect to
brokerage as set forth in the Trust's Prospectus and Statement of Additional
Information or as the Trustees may direct from time to time. In providing each
Fund with investment supervision, the Adviser will give primary consideration to
securing the most favorable price and efficient execution. The Adviser may also
consider

<PAGE>

the financial responsibility, research and investment information and other
services and research related products provided by brokers or dealers who may
effect or be a party to any such transactions or other transactions to which
other clients of the Adviser may be a party. The Funds recognize that the
services and research related products provided by such brokers may be useful to
the Adviser in connection with its services to other clients.

(ii) When the Adviser deems the purchase or sale of a security to be
in the best interest of a Fund as well as other clients, the Adviser, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be sold or purchased in order to obtain the most favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transactions, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to each Fund and to such other clients.

(e) The Adviser shall maintain, or cause to be maintained, all books and
records required under the Investment Company Act to the extent not maintained
by the custodian of the Trust. The Adviser shall render to the Trustees such
periodic and special reports as the Trustees may reasonably request.

(f) The Adviser shall provide the Trust's custodian on each business day
information relating to all transactions concerning each Fund's assets.

(g) The investment management services of the Adviser to the Trust and to
each Fund under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services to others.

3. The Trust has delivered to the Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:

(a) Declaration of Trust, as amended, as filed with the Secretary of the
Commonwealth of Massachusetts (such Declaration of Trust, as in effect on the
date hereof and as further amended from time to time, are herein called the
"Declaration of Trust");

(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");

(c) Certified resolutions of the Trustees authorizing the appointment of
the Adviser and approving this Agreement on behalf of the Trust and each Fund;

(d) Registration Statement on Form N-lA under the Investment Company Act
and the Securities Act of 1933, as amended from time to time (the "Registration
Statement"), as filed with the Securities and Exchange Commission (the
"Commission"), relating to the Trust and shares of beneficial interest of each
Fund and all amendments thereto.

(e) Notification of Registration of the Trust under the Investment Company
Act on Form N-8A as filed with the Commission and all amendments thereto;

<PAGE>

(f) Prospectus and Statement of Additional Information included in the
Registration Statement, as amended from time to time. All references to this
Agreement, the Prospectus and the Statement of Additional Information shall be
to such documents as most recently amended or supplemented and in effect.

4. The Adviser shall authorize and permit any of its directors, officers
and employees who may be elected as trustees or officers of the Trust and/ or
the Funds to serve in the capacities in which they are elected. All services to
be furnished by the Adviser under this Agreement may be furnished through such
directors, officers or employees of the Adviser.

5. The Adviser agrees that all records which it maintains for the Trust
and/or the Funds are property of the Trust and/or the Funds. The Adviser will
surrender promptly to the Trust and/or the Funds any such records upon either
the Trust's or the Fund's request. The Adviser further agrees to preserve such
records for the periods prescribed in Rule 3la-2 of the Commission under the
Investment Company Act.

6. (i) In connection with the services rendered by the Adviser under this
Agreement, the Adviser will pay all of the following expenses:

(a) the salaries and expenses of all personnel of the Trust, the Funds and the
Adviser required to perform the services to be provided pursuant to this
Agreement, except the fees of the trustees who are not affiliated persons
of the Adviser, and

(b) all expenses incurred by the Adviser, the Trust or by the Funds in
connection the performance of the Adviser's responsibilities hereunder,
other than brokers' commissions and any issue or transfer taxes chargeable
to each respective Fund in connection with its securities transactions.

7. In the event the expenses of each Fund for any fiscal year (including
the fees payable to the Adviser but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) exceed the lowest applicable annual expense limitation established
pursuant to the statutes or regulations of any jurisdictions in which shares of
each respective Fund are then qualified for offer and sale, the compensation due
the Adviser will be reduced by the amount of such excess, or, if such reduction
exceeds the compensation payable to the Adviser, the Adviser will pay each Fund,
whose expenses exceed such expense limitation, the amount of such reduction
which exceeds the amount of such compensation.

8. For the services provided and the expenses assumed pursuant to this
Agreement, each Fund will pay to the Adviser as compensation a fee accrued daily
and paid monthly at the annual rate of .75% of the first $250,000,000 of
aggregate average daily net assets of each Fund; .70% of the next $250,000,000
of such assets; .65% of the next $250,000,000 of such assets; .60% on the next
$250,000,000 of such asset and .55% on the remaining aggregate daily net assets
of the Fund in excess of $l,000,000,000.

9. The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,
employees or agents or controlling persons shall be liable for any error or
judgment or mistake of law, or for any loss suffered by the Trust and/or a Fund
in connection

3
<PAGE>

with or arising out of the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement.

10. This Agreement shall continue in effect for a period of two years from
the date hereof and shall continue in effect thereafter for so long as such
continuance is specifically approved at least annually by the affirmative vote
of (i) a majority of the Trustees of the Trust acting separately on behalf of
each Fund, who are not interested persons of the Trust, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) a majority
of the Trustees of the Trust or the holders of a majority of the outstanding
voting securities of each respective Fund; provided however, that this Agreement
may be terminated by the Trust, on behalf of a Fund at any time, without the
payment of any penalty, by the Trustees acting on behalf of a Fund or by vote
of a majority of the outstanding voting securities (as defined in the Investment
Company Act) of a Fund, or by the Adviser at any time, without the payment of
any penalty, on not more than 60 days' nor less than 30 days' written notice to
the other party. This Agreement shall terminate automatically in the event of
its assignment provided that a transaction which does not, under the Investment
Company Act, result in a change of actual control or management of the Adviser's
business shall not be deemed to be an assignment for the purposes of this
Agreement.

11. This agreement shall terminate automatically in the event of its
assignment; the term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940.

12. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a trustee, officer
or employee of the Trust and/or the Funds to engage in any other business or to
devote his time and attention in part to the management or other aspect of any
business, whether of a similar or dissimilar nature, nor limit or restrict the
right of the Adviser to engage in any other business or to render services of
any kind to any other person or entity.

13. During the term of this Agreement, the Trust and each Fund agrees to
furnish the Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature, or other material prepared for
distribution to shareholders of each Fund or the public, which refer in any way
to the Adviser, prior to use thereof and not to use such material if the Adviser
reasonably objects in writing within five business days (or such other time as
may be mutually agreed) after receipt. In the event of termination of the
Agreement, the Trust and/or each Fund will continue to furnish to the Adviser
such other information relating to the business affairs of the Trust and/or each
Fund as the Adviser at any time, or from time to time, reasonably requests in
order to discharge its obligations hereunder.

14. This Agreement may be amended by mutual agreement, but only after
authorization of such amendments by the affirmative vote of (i) the holders of
the majority of the outstanding voting securities of each Fund and ( ii) a
majority of the members of the Trustees who are not interested persons of the
Trust or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval.

4
<PAGE>

15. The Adviser, the Trust and the Funds each agree that the name
"Northstar" is proprietary to, and a property right of, the Adviser. The Trusts
and the Funds agree and consent that (i) each will only use the name "Northstar"
as part of its name and for no other purpose, (ii) each will not purport to
grant any third party the right to use the name "Northstar" and (iii) upon the
termination of this Agreement, the Trust and the Funds shall, upon the request
of the Adviser, cease to use the name "Northstar", and shall use its best
efforts to cause its officers, trustees and shareholders to take any and all
actions which the Adviser may request to effect the foregoing.

16. Any notice or other communications required to be given pursuant to
this Agreement shall be deemed to be given if delivered or mailed by registered
mail, postage paid, (1) to the Adviser at Two Greenwich Plaza, Suite 100,
Greenwich, CT 06830, Attention: Secretary; or (2) to the Trust and/or the Funds,
Two Greenwich Plaza, Suite 100, Greenwich, CT 06830, Attention: Secretary.

17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut. The terms "interested person",
"assignment", and "vote of the majority of the outstanding securities" shall
have the meaning set forth in the Investment Company Act.

18. The Declaration of Trust, establishing the Trust, dated August 18,
1993, a copy of which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Northstar Series Trust" refers to the Trustees under the
Declaration collectively as trustees, but not individually or personally; and no
Trustee, shareholder, officer, employee or agent of the Trust and/or the Funds
may be held to any personal liability, nor may resort be had to their private
property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust, but the Trust property only shall be
liable.

[cad 229]IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
written above.

NWNL NORTHSTAR SERIES TRUST

Attest: By:
--------------------------------
President

NORTHSTAR INVESTMENT MANAGEMENT CORP.

Attest: By:
--------------------------------
Sr. Vice President

<PAGE>

UNDERWRITING AGREEMENT FOR
CLASS A SHARES OF
NWNL NORTHSTAR SERIES TRUST

AGREEMENT made and entered into and by and between NWNL NORTHSTAR HIGH YIELD
BOND FUND, NWNL NORTHSTAR INCOME AND GROWTH FUND, and NWNL NORTHSTAR MULTI-
SECTOR BOND FUND, (each a "Fund" and collectively the "Funds"), series of NWNL
NORTHSTAR SERIES TRUST, a Massachusetts business trust (the "Trust"), and NWNL
NORTHSTAR DISTRIBUTORS, INC., a Minnesota Corporation (the "Underwriter").

1. Each Fund hereby appoints the Underwriter as its exclusive agent to promote
the sale and to arrange for the sale of Class A shares of beneficial interest of
each Fund, including both unissued shares and treasury shares, through broker-
dealers or otherwise, in all parts of the United States and elsewhere throughout
the world. Each Fund agrees to sell and deliver its Class A shares, upon the
terms hereinafter set forth, as long as it has unissued and/or treasury Class A
shares available for sale.

(a) Each Fund hereby authorizes the Underwriter, subject to law and the
Declaration of Trust of the Trust, to accept, for the respective account of each
Fund, orders for the purchase of its Class A shares, satisfactory to the
Underwriter, as of the time of receipt of such orders by the dealer -- or as
otherwise described in the Prospectus of the Trust.

(b) The public offering price of Class A shares shall be based on the net
asset value per share (as determined by each Fund) of the outstanding Class A
shares of each Fund. The net asset value shall be regularly determined on every
business day as of the time of the regular closing of the New York Stock
Exchange and the public offering price based upon such net asset value shall
become effective as set forth from time to time in the Trust's Prospectus; such
net asset value shall also be regularly determined, and the public offering
price based thereon shall become effective, as of such other times for the
regular determination of net asset value as may be required or permitted by
rules of the National Association of Securities Dealers, Inc., or of the
Securities and Exchange Commission. Each Fund shall furnish daily to the
Underwriter, with all possible promptness, a detailed computation of net asset
value of its Class A shares, and of the details entering into such computation.

The public offering price of such shares shall be equal to the net asset value,
as described above plus a commission to be fixed from time to time by the
Underwriter not to exceed 6% of the public offering price except that such price
per share may be adjusted to the nearest cent. The Underwriter may fix quantity
discounts and other similar terms not inconsistent with the provisions of the
Investment Company Act of 1940. The Underwriter shall not impose any
commission, permit any quantity discounts or impose any other similar terms in
connection with the sale of Class A shares of each Fund except as disclosed in
the Prospectus of the Trust.

(c) The Underwriter shall be entitled to deduct a commission on all Class
A shares sold equal to the difference between the public offering price and the
net asset value on which

<PAGE>

such price is based. If any such commission is received by a Fund, it will pay
the commission to the Underwriter. Out of such commission, the Underwriter may
allow to dealers such concessions as the Underwriter may determine from time to
time. Notwithstanding anything in the Agreement otherwise provided, sales may
be made at net asset value as provided in the Prospectus the Trust.

2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class A shares of each Fund, and otherwise promote
the sale and distribution and act as Underwriter for the sale and distribution
of the Class A shares of each Fund as such arrangements may profitably be made;
but so long as its does so, nothing herein contained shall prevent the
Underwriter from entering into similar arrangements with other funds and to
engage in other activities. Each Fund reserves the right to issue Class A
shares in connection with any merger or consolidation of a Fund with any other
investment company or any personal holding company or in connection with offers
of exchange exempted from Section 22(d) of the Investment Company Act of 1940.

3. To the extent a Fund shall offer (as set forth in the Trust's Prospectus)
to provide physical certificates evidencing ownership of Class A shares, upon
receipt by a Fund at its principal place of business of a written order from the
Underwriter, together with delivery instructions, the Fund shall, as promptly as
practicable, cause certificates for the Class A shares called for in such order
to be delivered or credited in such amounts and in such names as shall be
specified by the Underwriter, against payment therefor in such manner as may be
acceptable the Fund.

4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class A shares of each Fund shall be subject to the
approval of the respective Fund to which such literature relates. Each Fund
authorizes the Underwriter in connection with the sale or arranging for the sale
of its Class A shares to give only such information and to make only such
statements or representations as are contained in the Trust Prospectus or in
sales literature or advertisements approved by each Fund or in such financial
statements and reports as are furnished to the Underwriter pursuant to paragraph
6 below. The Funds shall not be responsible in any way for any information,
statements or representations given or made by the Underwriter or its
representatives or agents other than such information, statements and
representations.

5. The Underwriter, as agent of each Fund, is authorized, subject to the
direction of each Fund, to accept Class A shares for redemption at prices not in
excess of their net asset value, determined as prescribed in the Prospectus of
the Trust. Each respective Fund shall reimburse the Underwriter monthly for its
out-of-pocket expenses reasonably incurred on behalf of each Fund in carrying
out the foregoing authorization, but the Underwriter shall not be entitled to
any commissions or other compensation in respect to such redemption. The
Underwriter shall report all redemptions promptly to the respective Funds.

2
<PAGE>

request, and shall cooperate fully in the efforts of the Underwriter to sell and
arrange for the sale of its Class A shares and in the performance by the
Underwriter of all its duties under this Agreement.

7. Each Fund will pay or cause to be paid expenses (including counsel fees and
disbursements) of any registration of its Class A shares of beneficial interest
under, but not limited to, Federal, state or other regulatory authority, fees of
filing periodic reports with regulatory bodies and of preparing, setting in type
and printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class A shares of each Fund, for fees and
expenses incident to the issuance of Class A shares of beneficial interest such
as the cost of stock certificates (if offered), issuance taxes, fees of the
transfer agent, including the cost of preparing and mailing notices to
shareholders pertaining to transactions with respect to shareholders' accounts,
dividend disbursing agent's costs, including the cost of preparing and mailing
notices confirming shares acquired by shareholders pursuant to the reinvestment
of dividends and distributions, and the mailing to shareholders of prospectuses,
and such notices and reports as may be required from time to time by regulatory
bodies or for such other purposes, except for purposes of sales by the
Underwriter as outlined in paragraph 8 hereof.

8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Funds and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class A shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
A shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by each Fund with any Federal or State law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to a Fund's distribution
plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940.

9. Each Fund agrees to register, from time to time as necessary, additional
Class A shares with the Securities and Exchange Commission, state and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or that there may be no omission to state a material fact therein
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As used in this
Agreement, the term "Registration Statement" shall mean the Registration
Statement most recently filed by the Trust with the Securities & Exchange
Commission and effective under the Securities Act of 1933, as amended, as such
Registration Statement is amended from time to time, and the term "Prospectus"
shall mean the most recent form of prospectus authorized by the Trust for use by
the Underwriter and by dealers.

3
<PAGE>

10. This Agreement 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 each respective Fund,
or by vote of a majority on the Trustees, acting separately on behalf of each
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 agreements.

11. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a) (4) of the Investment Company Act of 1940.

12. This Agreement has been approved by the Trustees of the Trust acting on
behalf of the Funds and shall continue in effect for two years from its
effective date, and thereafter for successive annual periods, provided that such
continuance is specifically approved annually by a majority of the Trustees,
acting separately on behalf of each Fund, who are not interested persons of the
parties hereto as defined in the Investment Company Act of 1940 and either (a)
the Trustees of the Trust or (b) by vote of a majority of the outstanding voting
securities of each Fund, as defined in the Investment Company Act of 1940.

13. The Declaration of Trust, establishing the Trust, dated August 18, 1993, a
copy of which, together with all amendments thereto (the "Declaration") is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "NWNL Northstar Series Trust" refers to the Trustees
under the Declaration collectively as trustees, but not individually or
personally; and no Trustee, shareholder, officer, employee or agent of the Trust
and/or the Funds may be held to any personal liability, nor may resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with affairs of the Trust, but the Trust property only
shall be liable.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized and to become effective as of the
8th day of November, 1993.

Attest: NWNL NORTHSTAR SERIES TRUST

By: ________________________ By: ____________________________

Attest: NWNL NORTHSTAR DISTRIBUTORS, INC.

By: ________________________ By: ____________________________

<PAGE>

UNDERWRITING AGREEMENT FOR
CLASS B SHARES OF
NWNL NORTHSTAR SERIES TRUST

AGREEMENT made and entered into by and between NWNL NORTHSTAR HIGH YIELD FUND,
NWNL NORTHSTAR INCOME AND GROWTH FUND and NWNL NORTHSTAR MULTI-SECTOR BOND FUND
(each a "Fund" and collectively the "Funds"), series of NWNL NORTHSTAR SERIES
TRUST, a Massachusetts business trust (the "Trust"), and NWNL NORTHSTAR
DISTRIBUTORS, INC., a Minnesota corporation (the "Underwriter").

1. Each Fund hereby appoints the Underwriter as its exclusive agent to promote
the sale and to arrange for the sale of Class B shares of beneficial interest of
each Fund, including both unissued shares and treasury shares, through broker-
dealers of otherwise, in all parts of the United States and elsewhere throughout
the world. Each Fund agrees to sell and deliver its Class B shares, upon the
terms hereinafter set forth, as long as it has unissued and/or treasury Class B
shares available for sale.

(a) Each Fund hereby authorizes the Underwriter, subject to law and the
Declaration of Trust, to accept, for the respective account of each Fund, orders
for the purchase of its Class B shares, satisfactory to the Underwriter, as of
the time of receipt of such orders by the dealer-- or as otherwise described in
the Prospectus of the Trust.

(b) The public offering price of Class B shares shall be the net asset
value per share (as determined by each Fund) of the outstanding Class B shares
of each Fund. The net asset value shall be regularly determined on every
business day as of the time of the regular closing of the New York Stock
Exchange and the public offering price shall become effective as set forth from
time to time in the Prospectus; such net asset value shall also be regularly
determined, and the public offering price shall become effective, as of such
other times for the regular determination of net asset value as may be required
or permitted by rules of the National Association of Securities Dealers, Inc.
or of the Securities and Exchange Commission. Each Fund shall furnish daily to
the Underwriter, with all possible promptness, a detailed computation of net
asset value of its Class B shares.

(c) As compensation for providing services under this Agreement, (i) the
Underwriter shall receive from each Fund distribution and service fees under the
terms and conditions set forth in each respective Distribution Plan for each
Fund adopted under Rule 12b-1 under the Investment Company Act of 1940, as
amended, as that Plan may be amended from time to time and subject to any
further limitations on such fees as the Trustees may impose, and (ii) the
Underwriter shall receive from each Fund all contingent deferred sales charges
applied on redemption of Class B shares of such Fund. Whether and to what
extent a contingent deferred sales charge will be imposed with respect to a
redemption shall be determined in accordance with, and in a manner set forth in,
the Trust's Prospectus.

<PAGE>

(d) The Underwriter may reallow any or all of the distribution and
services fees and contingent deferred sales charges which it is paid under the
Agreement to such dealers as the Underwriter may from time to time determine.

(e) The Underwriter may fix quantity discounts and other similar
variances or waivers of the contingent deferred sales charge not inconsistent
with the provisions of the Investment Company Act of 1940; provided however,
that the Underwriter shall not impose any commission, permit any quantity
discount, or impose any other similar waiver or variance in connection with the
sale of Class B shares except as disclosed in the Prospectus of the Trust.

2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class B shares of each Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class B shares of each Fund as such arrangements may profitably be made;
but so long as its does so, nothing herein contained shall prevent the
Underwriter from entering into similar arrangements with other funds and to
engage in other activities. Each Fund reserves the right to issue Class B
shares in connection with any merger or consolidation of a Fund with any other
investment company or any personal holding company or in connection with offers
of exchange exempted from Section 22(d) of the Investment Company Act 1940.

3. To the extent a Fund shall offer (as set forth in the Trust's Prospectus)
to provide physical certificates evidencing ownership of Class B shares, upon
receipt by a Fund at its principal place of business of a written order from the
Underwriter, together with delivery instructions, the Fund shall, as promptly as
practicable, cause certificates for the Class B shares called for in such order
to be delivered or credited in such amounts and in such names as shall be
specified by the Underwriter, against payment therefor in such manner as may be
acceptable to the Fund.

4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class B shares of each Fund shall be subject to the
approval of the respective Fund to which such literature relates. Each Fund
authorizes the Underwriter in connection with the sale or arranging for the sale
of its Class B shares to give only such information and to make only such
statements or representations as are contained in the Prospectus or in sales
literature or advertisements approved by each respective Fund or in such
financial statements and reports as are furnished to the Underwriter pursuant to
paragraph 6 below. The Funds shall not be responsible in any way for any
information, statements or representations given or made by the Underwriter or
its representatives or agents other than such information, statements and
representations.

5. The Underwriter, as agent of each Fund, is authorized, subject to the
direction of each Fund, to accept Class B shares for redemption at prices
determined as prescribed in the Prospectus of the Trust. Such price shall
reflect the subtraction of the applicable contingent deferred sales charge, if
any, computed in accordance with and in the manner set forth in the Trust's
Prospectus. Each respective Fund shall reimburse the Underwriter monthly for
its out-of-pocket expenses reasonably incurred on behalf of each Fund in
carrying out the foregoing authorization. The Underwriter shall report all
redemptions promptly to the respective Funds.

2
<PAGE>

6. Each Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of each Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class B shares and in the performance by the Underwriter of all its
duties under this Agreement.

7. Each Fund will pay or cause to be paid expenses (including counsel fees and
disbursements) of any registration of its Class B shares of beneficial interest
under, but not limited to, Federal, state or other regulatory authority, fees of
filing periodic reports with regulatory bodies and of preparing, setting in type
and printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class B shares of each Fund, for fees and
expenses incident to the issuance of Class B shares of beneficial interest, such
as the cost of stock certificates (if offered), issuance taxes, fees of the
transfer agent, including the cost of preparing and mailing notices to
shareholders pertaining to transactions with respect to shareholders' accounts,
dividend disbursing agent's costs, including the cost for preparing and mailing
notices confirming shares acquired by shareholders pursuant to the reinvestment
of dividends and distributions, and the mailing to shareholders of prospectuses,
and notices and reports as may be required from time to time by regulatory
bodies or for such other purposes, except for purposes of sales by the
Underwriter as outlined in paragraph 8 hereof.

8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Funds and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class B shares of each Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
B shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by each Fund with any Federal or state law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to a Fund's distribution
plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940.

9. Each Fund agrees to register, from time to time as necessary, additional
Class B shares with the Securities & Exchange Commission, State and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or that their may be no omission to state a material fact therein
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As used in this Agreement, the term
"Registration Statement" shall mean the Registration Statement most recently
filed by the Trust with the Securities & Exchange

3
<PAGE>

Commission and effective under the Securities Act of 1933, as amended, as such
Registration Statement is amended from time to time, and the term "Prospectus"
shall mean the most recent form of prospectus authorized by the Trust for use by
the Underwriter and by dealers.

10. This Agreement 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 class of outstanding voting securities of each respective Fund
or by vote of a majority of the Trustees, acting separately on behalf of each
Fund, who are not "interested persons" of the Funds and who have not direct or
indirect financial interest in the operation of the Plan or in any agreements.

12. This Agreement has been approved by the Trustees of the Trust on behalf of
the Funds and shall continue in effect for two years from its effective date.
Thereafter, this Agreement shall continue for successive annual periods,
provided that such continuance is specifically approved annually by a majority
of the Trustees who are not interested persons of the parties hereto as defined
in the Investment Company Act of 1940 and either (a) by vote of the Trustees of
the Trust or (b) by vote of a majority or the outstanding voting securities of
each Fund, as defined in the Investment Company Act of 1940.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized and to become effective as
of this 8th day of November, 1993.

Attest: NWNL NORTHSTAR SERIES TRUST

By: ________________________ By: _____________________________

Attest: NWNL NORTHSTAR DISTRIBUTORS, INC.

By: ________________________ By: _____________________________

<PAGE>

UNDERWRITING AGREEMENT FOR
CLASS C SHARES OF
NWNL NORTHSTAR SERIES TRUST

AGREEMENT made and entered into by and between NWNL NORTHSTAR HIGH YIELD BOND
FUND, NWNL NORTHSTAR INCOME AND GROWTH FUND and NWNL NORTHSTAR MULTI-SECTOR
BOND FUND (each a "Fund" and collectively the "Funds"), series of NWNL NORTHSTAR
SERIES TRUST, a Massachusetts business trust (the "Trust"), and NWNL NORTHSTAR
DISTRIBUTORS, INC., a Minnesota corporation (the "Underwriter").

1. Each Fund hereby appoints the Underwriter as its exclusive agent to promote
the sale and to arrange for the sale of Class C shares of beneficial interest of
each Fund, including both unissued shares and treasury shares, through broker-
dealers of otherwise, in all parts of the United States and elsewhere throughout
the world. Each Fund agrees to sell and deliver its Class C shares, upon the
terms hereinafter set forth, as long as it has unissued and/or treasury Class C
shares available for sale.

(a) Each Fund hereby authorizes the Underwriter, subject to law and the
Declaration of Trust, to accept, for the respective account of each Fund, orders
for the purchase of its Class C shares, satisfactory to the Underwriter, as of
the time of receipt of such orders by the dealer-- or as otherwise described in
the Prospectus of the Trust.

(b) The public offering price of Class C shares shall be the net asset
value per share (as determined by each Fund) of the outstanding Class C shares
of each Fund. The net asset value shall be regularly determined on every
business day as of the time of the regular closing of the New York Stock
Exchange and the public offering price shall become effective as set forth from
time to time in the Prospectus; such net asset value shall also be regularly
determined, and the public offering price shall become effective, as of such
other times for the regular determination of net asset value as may be required
or permitted by rules of the National Association of Securities Dealers, Inc.
or of the Securities and Exchange Commission. Each Fund shall furnish daily to
the Underwriter, with all possible promptness, a detailed computation of net
asset value of its Class C shares.

(c) As compensation for providing services under this Agreement, (i) the
Underwriter shall receive from each Fund distribution and service fees under the
terms and conditions set forth in the Class C Distribution Plan for each Fund
adopted under Rule 12b-1 under the Investment Company Act of 1940, as amended,
as that Plan may be amended from time to time and subject to any further
limitations on such fees as the Trustees may impose, and (ii) the Underwriter
shall receive from each Fund all contingent deferred sales charges applied on
redemption of Class C shares of such Fund. Whether and to what extent a
contingent deferred sales charge will be imposed with respect to a redemption
shall be determined in accordance with, and in a manner set forth in, the
Trust's Prospectus.

<PAGE>

(e) The Underwriter may fix quantity discounts and other similar
variances or waivers of the contingent deferred sales charge not inconsistent
with the provisions of the Investment Company Act of 1940; provided however,
that the Underwriter shall not impose any commission, permit any quantity
discount, or impose any other similar waiver or variance in connection with the
sale of Class C shares except as disclosed in the Prospectus of the Trust.

2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class C shares of each Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class B shares of each Fund as such arrangements may profitably be made;
but so long as its does so, nothing herein contained shall prevent the
Underwriter from entering into similar arrangements with other funds and to
engage in other activities. Each Fund reserves the right to issue Class C
shares in connection with any merger or consolidation of a Fund with any other
investment company or any personal holding company or in connection with offers
of exchange exempted from Section 22(d) of the Investment Company Act 1940.

3. To the extent a Fund shall offer (as set forth in the Trust's Prospectus)
to provide physical certificates evidencing ownership of Class C shares, upon
receipt by a Fund at its principal place of business of a written order from the
Underwriter, together with delivery instructions, the Fund shall, as promptly as
practicable, cause certificates for the Class C shares called for in such order
to be delivered or credited in such amounts and in such names as shall be
specified by the Underwriter, against payment therefor in such manner as may be
acceptable to the Fund.

4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class C shares of each Fund shall be subject to the
approval of the respective Fund to which such literature relates. Each Fund
authorizes the Underwriter in connection with the sale or arranging for the sale
of its Class C shares to give only such information and to make only such
statements or representations as are contained in the Prospectus or in sales
literature or advertisements approved by each respective Fund or in such
financial statements and reports as are furnished to the Underwriter pursuant to
paragraph 6 below. The Funds shall not be responsible in any way for any
information, statements or representations given or made by the Underwriter or
its representatives or agents other than such information, statements and
representations.

5. The Underwriter, as agent of each Fund, is authorized, subject to the
direction of each Fund, to accept Class C shares for redemption at prices
determined as prescribed in the Prospectus of the Trust. Such price shall
reflect the subtraction of the applicable contingent deferred sales charge, if
any, computed in accordance with and in the manner set forth in the Trust's
Prospectus. Each respective Fund shall reimburse the Underwriter monthly for
its out-of-pocket expenses reasonably incurred on behalf of each Fund in
carrying out the foregoing authorization. The Underwriter shall report all
redemptions promptly to the respective Funds.

2
<PAGE>

6. Each Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of each Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class C shares and in the performance by the Underwriter of all its
duties under this Agreement.

7. Each Fund will pay or cause to be paid expenses (including counsel fees and
disbursements) of any registration of its Class C shares of beneficial interest
under, but not limited to, Federal, state or other regulatory authority, fees of
filing periodic reports with regulatory bodies and of preparing, setting in type
and printing the Prospectus and any amendments thereto prepared for use in
connection with the offering of Class C shares of each Fund, for fees and
expenses incident to the issuance of Class C shares of beneficial interest, such
as the cost of stock certificates (if offered), issuance taxes, fees of the
transfer agent, including the cost of preparing and mailing notices to
shareholders pertaining to transactions with respect to shareholders' accounts,
dividend disbursing agent's costs, including the cost for preparing and mailing
notices confirming shares acquired by shareholders pursuant to the reinvestment
of dividends and distributions, and the mailing to shareholders of prospectuses,
and notices and reports as may be required from time to time by regulatory
bodies or for such other purposes, except for purposes of sales by the
Underwriter as outlined in paragraph 8 hereof.

8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Funds and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class C shares of each Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
C shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by each Fund with any Federal or state law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to a Fund's distribution
plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940.

9. Each Fund agrees to register, from time to time as necessary, additional
Class C shares with the Securities & Exchange Commission, State and other
regulatory bodies and to pay the related filing fees therefor and to file such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus or that their may be no omission to state a material fact therein
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As used in this Agreement, the term
" Registration Statement" shall mean the Registration Statement most recently
filed by the Trust with the Securities & Exchange

3
<PAGE>

10. This Agreement 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 class of outstanding voting securities of each respective Fund
or by vote of a majority of the Trustees, acting separately on behalf of each
Fund, who are not "interested persons" of the Funds and who have no direct or
indirect financial interest in the operation of the Plan or in any related
agreements.

12. This Agreement has been approved by the Trustees of the Trust on
behalf of the Funds and shall continue in effect for two years from its
effective date. Thereafter, this Agreement shall continue for successive annual
periods, provided that such continuance is specifically approved annually by a
majority of the Trustees who are not interested persons of the parties hereto as
defined in the Investment Company Act of 1940 and either (a) by vote of the
Trustees of the Trust or (b) by vote of a majority or the outstanding voting
securities of each Fund, as defined in the Investment Company Act of 1940.

13. The Declaration of Trust, establishing the Trust, dated August
18, 1993, a copy of which together with all amendments thereto (the
"Declaration") is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "NWNL Northstar Series Trust" refers to
the Trustees under the Declaration collectively as Trustees, but not
individually or personally; and no Trustee, shareholder, officer, employee or
agent of the Trust and/or the Funds may be held to any personal liability, nor
may resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of the Trust,
but the Trust property only shall be liable.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized and to become effective as
of the 8th day of November, 1993.

Attest: NWNL NORTHSTAR SERIES TRUST

By: ________________________ By: _____________________________

Attest: NWNL NORTHSTAR DISTRIBUTORS, INC.

By: ________________________ By: _____________________________

<PAGE>
Exhibit 6(d)

Form of Dealer Agreement

for

Northstar Affiliated Investment Companies

<PAGE>

NORTHSTAR DISTRIBUTORS, INC.
Two Pickwick Plaza
Greenwich, CT 06830

DEALER AGREEMENT FOR THE NORTHSTAR AFFILIATED MUTUAL FUNDS

Gentlemen:

We invite you to become a member of the selling group to distribute shares of
the open-end investment companies (hereinafter collectively referred to as the
"Funds" or, individually as the "Fund") for which we are or may become a
principal underwriter, (as defined in the Investment Company Act of 1940), on
the following terms:

1. You represent and warranty that you are a member of the National
Association of Securities Dealers, Inc., ("NASD") and that you will
continue to maintain membership in the NASD, or that you are a foreign
dealer, not eligible for membership in the NASD. You and we agree to abide
by the rules and regulations of the Securities and Exchange Commission and
the NASD, including, without limitation, Section 26 of Articles III of the
NASD Rules of Fair Practice, all of which are incorporated herein as if set
forth in full.

2. Orders received from you will be accepted by us only at the public offering
price applicable to each order, as described in the then current Fund
prospectus. Procedures relating to the handling of orders will be subject
to the terms of the then current prospectus of the Fund and to written
instructions which we shall forward from time to time to you, which shall
become a part of this Agreement. All orders are subject to acceptance or
rejection by us in our sole discretion. No conditional order will be
accepted on any basis other than a definite price. You understand and
agree that you are acting as principal under this agreement and not as our
agent or agent of the Funds, and that you are in no way responsible for the
manner of our performance or for any of our acts or omissions in connection
therewith.

3. You understand and agree that the applicable sales charge and dealer
concession pertaining to any sales of Fund shares will be in an amount as
set forth in the then current prospectus of such Fund, subject to
reductions under a variety of circumstances described in each Fund's
current prospectus. To obtain these reductions, we must receive notice
when the sale takes place which would qualify for the reduction.

4. The provisions of this Paragraph 4 are applicable to each of the Funds
which have adopted or which may, in the future, adopt a Plan or Plans (the
"Plans") pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Act"). The Plans and the provisions of this Paragraph 4 have been
approved by a majority of the Trustees/Directors of the applicable Fund,
including a majority of the Trustees/Directors who are not interested
persons of the Funds and who have no direct or indirect financial interest
in the operation of the Plans or any related agreements (the "non-
interested Trustees"), cast in person at a meeting called for the purpose
of voting thereon. Such approval included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that each of the Plans will
benefit the Fund and its shareholders. The Plans have also been approved
by a vote of at least a majority of the Fund's outstanding voting
securities, as defined in the Act. We represent and warrant that the Funds
will conform in all respects to the requirements of Section 26 of the
NASD's Rules of Fair Practice and that the prospectuses for the Funds will
contain disclosure with respect to fees paid and charges imposed in a
manner to evidence compliance with the NASD's rules regarding such fees and
charges.

(a) To the extent you provide services in connection with the sale of the
Fund's shares pursuant to the Plans and the Fund's prospectus, we
shall pay you quarterly a fee thereof based on the net asset value of
Fund shares which are owned of record by your firm as nominee for your
customers or which are owned by those customers of your firm whose
records, as maintained by the Fund or its agent, designate your firm
as the customer's dealer of record. No such quarterly fee will be
paid if the average net asset value of all of you customer accounts
upon which the fee is based is less than $1,000,000. Payment of such
quarterly fee shall be made within 45 days after the close of each
quarter for which such fee is payable, provided however, that you
shall waive payment until we are in receipt of such payment from the
Fund under whose Plan the amount is payable. No such quarterly fee
will be paid to you with respect to shares purchased by you and
redeemed or repurchased by the Fund or by us as agent within seven (7)
business days after the date of our confirmation of such purchase.

(b) You shall furnish us and the Fund with such information as shall
reasonably be requested by the Trustees/Directors of the Fund with
respect to the fees paid to you pursuant to this Paragraph 4.

(c) We shall furnish to the Trustees/Directors of the Fund, for their
review, on a quarterly basis a written report of the amounts expended
under the Plan by us and the purposes for which such expenditures were
made.

(d) The provisions of this Paragraph 4 may be terminated by the vote of a
majority of the non-interested Trustees/Directors or by a vote of a
majority of the Fund's outstanding shares, on sixty (60) days' written
notice without payment of any penalty. Such provisions will be
terminated by any act which terminates either the Fund's Underwriting
Agreement with us or this Dealer Agreement and shall terminate
immediately in the event of the assignment, as that term is defined in
the Act, of this Dealer Agreement.

(e) The provisions of the Underwriting Agreement between the Fund and
Northstar Distributors, Inc., insofar as they relate to the Plan, are
incorporated herein by reference. The provisions of this Paragraph 4
shall continue in full force and effect only so long as the
continuance of the Plan and these provisions are approved at least
annually by a vote of the Trustees, including a majority of the non-
interested Trustees, case in person at a meeting called for the
purpose of voting thereon.

5. Payment for Fund shares sold to you shall be made on or before the
settlement date specified in our confirmation, at our office and by check
or wire. We reserve the right to delay issuance or transfer of shares
until such check has cleared. If such payment is not received by us, we
reserve the right, without notice, forthwith either to cancel the sale, or,
at our option, to sell the shares ordered back to such Fund, and in either
case, we may hold you responsible for any loss, including loss of profit,
suffered by us or by such Fund resulting from your failure to make payment
as aforesaid. You shall assume responsibility for any loss to a Fund
caused by a correction made by you subsequent to trade date, and you shall
immediately pay such loss to the Fund upon notification.

6. You agree to purchase shares only from us or from our customers. If you
purchase shares from us, you agree that all such purchases shall be made
only to cover orders received by you from your customers, or for your own
bona fide investment. If you purchase shares from your customers, you
agree to pay such customers not less than the applicable liquidating price
determined as set forth in the then current Fund prospectus.

<PAGE>

7. You agree to sell shares only (a) to your customers at the applicable
public offering price or (b) to the Fund or to us as selling agent for the
Fund at the liquidating price, in each case determined as set forth in the
Fund's current prospectus. With respect to Funds offering both shares
subject to a front-end sales charge, shares subject to a contingent
deferred sales charge, or shares subject to a level load, you agree to
conform to our written compliance standards as we may from time to time
provide them to you.

8. You shall not withhold placing with us orders received from your customers
so as to profit yourself as a result of such withholding; e.g., by a change
in the net asset value from that used in determining the public offering
price to your customers. You will place orders for purchases and
redemptions for your customers promptly upon receipt from your customers.

9. If any shares sold by us under the terms of this Agreement are repurchased
or liquidated by the funds, or by us as agent for the Funds, or is tendered
for liquidation to the Funds, within seven (7) business days after such
confirmation of your original order, then you shall forthwith repay to the
Funds the full concession or commission allowed to you on such sale and we
shall forthwith repay to the Funds our share of the selling commission
thereon. We shall notify you of such repurchase or liquidation within ten
(10) days from the day on which written redemption requests and if
applicable, share certificates are delivered to us or to the Funds.

10. You will not offer the Funds for sale in any state where they are not
qualified for sale under the securities laws of such state or where you are
not qualified to act as a dealer, except for states in which they or you
are exempt from qualification. On request we will provide you with a list
of states where the Funds are qualified for sale. You will not offer or
sell shares of the Funds except under circumstances that will result in
compliance with applicable federal and state securities laws.

11. No person is authorized to make any representation relating to the shares
of the Funds, except those contained in the then current Funds
prospectuses, statements of additional information and any authorized
supplemental material supplied by us. In ordering shares you rely solely
and conclusively on the representations contained in the then current
prospectuses and statements of additional information, and supplemental
material, if any, above described. Reasonable numbers of additional copies
of the then current prospectuses and statements of additional information
are and will be available on written request. In no transaction shall you
have any authority to take any action or make any representation binding
upon the Funds, any other member of the Selling Group, or ourselves. You
shall provide a currently effective prospectus to every purchaser or
shares, except to the extent that we expressly undertake to do so on
your behalf. In the event shares will be held by you in nominee name, it
is agreed to that you will pass the prospectus on to the ultimate purchaser
to the extent known to you. All advertising and promotion of the Funds by
foreign dealers shall conform to the standards applicable to members in the
United States.

12. We and you agree that all disputes between us of whatever subject matter,
whether existing on the date thereof or arising hereafter, shall be
submitted to arbitration in accordance with the Code of Arbitration
Procedure of the NASD, or similar rules or code, in effect at the time of
the submission of any such dispute.

13. Each Fund reserves the right in its discretion and we reserve the right, in
our discretion and without notice to you or to any members of the Selling
Group, to suspend sales, to withdraw the offering, to change the offering
price, or to amend, modify or cancel this Agreement and concessions,
discounts or commissions at any time payable or allowable hereunder
(including, without limitation, concessions, or commissions on future
periodic investments or reinvestment). This Agreement may be amended by us
at any time by written notice to you, and upon your receipt thereof, such
amendment shall become effective. Each party to this Agreement may cancel
its participation in this Agreement by giving written notice to the other
parties. Such notice shall be deemed to have been given and to be
effective on the date on which it was either delivered personally to the
other parties or any officer or member thereof, or was mailed postpaid or
delivered to a telegraph office for transmission to the other parties at
their address as shown herein. This agreement shall terminate immediately
upon the appointment of a Trustee under the Securities Investor Protection
Act or any other act of insolvency by you. The termination of this
Agreement by any of the foregoing means shall have no effect upon
transactions entered into prior to the effective date of termination. A
trade placed by you subsequent to your voluntary termination of the
Agreement will not serve to reinstate the Agreement. Reinstatement, except
in the case of a temporary suspension of a dealer will only be effective
upon written notification by us.

14. This Agreement also permits you to offer variable contracts ("Contracts")
issued by Northwestern National Life Insurance Company ("NWNL") for which
we serve as distributor. You may offer and sell Contracts to customers
only through your registered representatives who are variable contract
licensed pursuant to applicable state law and who have been specifically
appointed by NWNL to solicit Contracts in the applicable jurisdiction. You
may offer and sell the Contracts only in accordance with the terms and
conditions of the currently effective Prospectus or offering brochures
applicable to the Contracts and to any Fund which may serve as a funding
vehicle for the Contracts. You may not make any representation, including
any representation regarding the tax status of the Contract, not included
in such Prospectuses or offering brochures or in any written, authorized
advertising or sales material supplied by NWNL and you shall further be
liable for any claim against NWNL or us arising from your failure to comply
with this provision. Any proposed advertising, printed material or
presentation script relating to the Contracts must be approved in writing
by NWNL prior to its use. In no event shall you forward to NWNL less than
any payment collected by your registered representative, without deduction
for compensation or commission. You agree to observe NWNL's written
procedures, rules and guidelines relating to the Contracts. You agree that
references in this Agreement to "FUND" OR "FUNDS" with respect to the
Contracts shall mean or include all or any of the NWNL/Northstar Variable
Account, NWNL, or us, and that such provisions shall be and hereby are
deemed amended as necessary to comply with Section 29 of Article III of the
NASD Rules of Fair Practice, federal and state laws, and the rules and
regulations of the SEC applicable to variable contracts.

15. All communications shall be sent to us at our offices at Two Pickwick
Plaza, Greenwich, CT 06830. Any notice to you shall be duly given if
mailed or telegraphed to you at the address shown on this Agreement.

16. This Agreement shall become effective as of the date when it is executed
and dated by you below. This Agreement and all the rights and obligations
of the parties hereunder shall be governed by and construed under the laws
of the State of New York.

NORTHSTAR DISTRIBUTORS, INC.

Date By
------------------------- -----------------------------------
Accepted:

Date Investment Dealer
------------------------------- -------------------
Authorized Signature
-----------------
Print Name
---------------------------

<PAGE>

CUSTODY AGREEMENT

This AGREEMENT, dated as of ____________ ____, 19___, by and between
__________________________________, a _______________ organized under the laws
of the ________________________ (the "Trust"), on behalf of _________________
(the "Fund") and CUSTODIAL TRUST COMPANY, a bank organized and existing under
the laws of the State of New Jersey (the "Custodian").

W I T N E S S E T H:

WHEREAS, the Trust desires that the Fund's Securities, cash and other
assets be held and administered by Custodian pursuant to this Agreement;

WHEREAS, the Trust is a management investment company registered under the
Investment Company Act of 1940 (the "1940 Act");

WHEREAS, Custodian represents that it is a bank having the qualifications
prescribed in Section 26(a)(i) of the 1940 Act;

NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and Custodian hereby agree as follows:

ARTICLE I
DEFINITIONS

Whenever used in this Agreement, the following terms, unless the context
otherwise requires, shall mean:

1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf
<PAGE>

of the Fund and identified, by name or by office, in Exhibit A hereto or any
person duly designated to do so by an investment adviser of the Fund specified
by the Fund in Exhibit B hereto.

1.2 "BOARD OF TRUSTEES" means the Board of Trustees of the Trust or, when
permitted under the 1940 Act, the Executive Committee thereof, if any.

1.3 "BOOK-ENTRY SYSTEM" means a book-entry system maintained by a Federal
Reserve bank as provided for in Subpart O of Treasury Circular No. 300, 31 CFR
306, in Subpart B of 31 CFR Part 350, or in such other book-entry regulations of
federal agencies as are substantially in the form of such Subpart O.

1.4 "BUSINESS DAY" means any day recognized as a settlement day by The
New York Stock Exchange, Inc. and on which banks in the State of New Jersey are
open for business.

1.5 "CUSTODY ACCOUNT" means the account in the name of the Fund, which is
provided for in Section 3.2 below.

1.6 "ELIGIBLE FOREIGN CUSTODIAN" means any banking institution, trust
company or other entity organized under the laws of a country other than the
United States which is eligible under Rule 17f-5 under the 1940 Act to act as a
sub-custodian for Foreign Securities and other assets of the Fund held outside
the United States.

1.7 "FOREIGN SECURITIES" means Securities as defined on paragraph (c)(1)
of Rule 17f-5 under the 1940 Act.

1.8 "FOREIGN SECURITIES DEPOSITORY" means a securities or clearing agency
as defined in subparagraphs (c)(2)(iii) and (iv) of Rule 17f-5 under the 1940
Act.

-2-
<PAGE>

1.9 "MASTER REPURCHASE AGREEMENT" means that certain Master Repurchase
Agreement of even date herewith between the Fund and Bear, Stearns & Co. Inc.,
an affiliate of Custodian ("Bear Stearns"), as it may from time to time be
amended.

1.10 "1940 ACT" means the Investment Company Act of 1940, as amended.

1.11 "OFFICER" means the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Fund.

1.12 "ORAL INSTRUCTIONS" means instructions orally transmitted to and
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person, (b) recorded and kept among the records of
Custodian made in the ordinary course of business, and (c) orally confirmed by
Custodian.

1.13 "PROPER INSTRUCTIONS" means Oral Instructions or Written Instructions.
Proper Instructions may be continuing Written Instructions when deemed
appropriate by both parties.

1.14 "SECURITIES" includes, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, futures contracts, bankers' acceptances, mortgage-backed securities
or other obligations, and any certificates, receipts, warrants or other
instruments or documents representing rights to receive, purchase or subscribe
for the same, or evidencing or representing any other rights or interests
therein.

1.15 "SECURITIES DEPOSITORY" means The Depository Trust Company and
(provided that Custodian has received a copy of a resolution of the Board of
Trustees of the Fund, certified by an Officer, specifically approving the use
thereof as a depository for the Fund) any other clearing agency registered with
the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 (the "1934 Act"), which acts as a system for the central
handling and deposit of Securities where all Securities of any particular class
or series of an issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical delivery of
the Securities.

-3-
<PAGE>

1.16 "SECURITIES LOAN AGREEMENT" means that certain Securities Loan
Agreement of even date herewith between the Fund and Bear, Stearns Securities
Corp., an affiliate of Custodian ("BS Securities"), as it may from time to time
be amended.

1.17 "SHARES" means the authorized shares of each class of beneficial
interest of the Fund.

1.18 "WRITTEN INSTRUCTIONS" means (a) written communications received by
Custodian and signed by a person reasonably believed by Custodian to be an
Authorized Person, or (b) communications by telex or any other such system from
a person reasonably believed by Custodian to be an Authorized Person, or (c)
communications between electro-mechanical or electronic devices.

ARTICLE II
APPOINTMENT OF CUSTODIAN

2.1 APPOINTMENT. The Fund hereby appoints Custodian as custodian of all
such Securities, cash and other assets, as may be acceptable to Custodian and
from time to time delivered to it by the Fund or others for the account of the
Fund.

2.2 ACCEPTANCE. Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.

ARTICLE III
CUSTODY OF CASH AND SECURITIES

3.1 SEGREGATION. All Securities and non-cash property of the Fund in the
possession of Custodian (other than Securities maintained by Custodian in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of Custodian and shall
be identified as belonging to the Fund.

-4-
<PAGE>

3.2 CUSTODY ACCOUNT. (a) Custodian shall open and maintain in its trust
department a custody account in the name of the Fund, subject only to draft or
order of Custodian, in which Custodian shall enter and carry all Securities,
cash and other assets of the Fund which are delivered to Custodian and accepted
by it. Custodian shall not be under any duty or obligation to require the Fund
to deliver to it any Securities or funds owned by the Fund and shall have no
responsibility or liability for or on account of Securities or funds not so
delivered.

(b) If Custodian at any time fails to receive any of the documents referred
to in Section 3.5(a) below, then, until such time as it receives such document,
it shall not be obligated to receive any Securities of the Fund into the Custody
Account and shall be entitled to return to the Fund any Securities of the Fund
that it is holding.

(d) Custodian is authorized to disclose the name, address and securities
positions of the Fund to the issuers of such securities when requested by them
to do so.

3.3 APPOINTMENT OF AGENTS. (a) Custodian may employ suitable agents,
which may include affiliates of Custodian such as Bear Stearns or BS Securities,
provided, however, that Custodian shall not employ BS Securities to hold any of
the Collateral under the Securities Loan Agreement (as such term "Collateral" is
defined therein) or under any other securities loan agreement between the Fund
and BS Securities (whether now or hereafter in effect), or Bear Stearns to hold
any Purchased Securities under the Master Repurchase Agreement (as such term
"Purchased Securities" is defined therein) or under any other repurchase
agreement between the Fund and BS Securities (whether now or hereafter in
effect). The appointment of any agent pursuant to this Section 3.3(a) shall not
relieve Custodian of any of its obligations or liabilities under this Agreement.
However, no Book-Entry System, Securities Depository or other securities
depository or clearing agency (whether foreign or domestic) which it is or may
become standard market practice to use for the comparison and settlement of
trades in securities shall be an agent or sub-contractor of Custodian for
purposes of this Section 3.3(a) or otherwise.

-5-
<PAGE>

(b) In its discretion, Custodian may appoint, and at any time remove, any
domestic bank or trust company which is qualified to act as a custodian under
the 1940 Act, as sub-custodian to hold Securities and cash of the Fund and to
carry out such other provisions of this Agreement as it may determine, and may
also open and maintain one or more banking accounts with such a bank or trust
company (any such accounts to be in the name of Custodian and subject only to
its draft or order), provided, however, that the appointment of any such agent
or opening and maintenance of any such accounts shall be at Custodian's expense
and shall not relieve Custodian of any of its obligations or liabilities under
this Agreement.

(c) Upon receipt of Written Instructions to do so and at the Fund's
expense, Custodian shall appoint as sub-custodian such domestic bank or trust
company as is named therein, provided that (i) such bank or trust company is
qualified to act as a custodian under the 1940 Act, and (ii) notwithstanding
anything to the contrary in Section 10.1 below or elsewhere in this Agreement,
Custodian shall have no greater liability to the Fund for the actions or
omissions of any such sub-custodian than any such sub-custodian has to
Custodian, and Custodian shall not be required to discharge any such liability
which may be imposed on it unless and until such sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full.

3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Fund shall deliver to Custodian
all of the Fund's Securities, cash and other assets, which are acceptable to
Custodian, including (a) all payments of income, payments of principal and
capital distributions received by the Fund with respect to such Securities, cash
or other assets owned by the Fund at any time during the term of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
term, of Shares. Custodian shall not be responsible for such Securities, cash
or other assets until actually received by it.

3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. Custodian may deposit
and/or maintain Securities of the Fund in a Securities Depository or in a
Book-Entry System, subject to the following provisions:

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(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to Custodian a
resolution of the Board of Trustees of the Fund, certified by an Officer,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.3 above) on an on-going basis to deposit in such Securities
Depository or Book-Entry System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance hereunder (or under
the applicable sub-custody agreement in the case of such sub-custodian),
including, without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities. So long as such Securities Depository or
Book-Entry System continues to be used for the deposit of Securities of the
Fund, the Fund shall annually deliver to Custodian an Officer's certificate
certifying that the Fund's Board of Trustees has reviewed such use for the year
in which such certificate is delivered to Custodian.

(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of Custodian in
such Book-Entry System or Securities Depository which includes only assets held
by Custodian as a fiduciary, custodian or otherwise for customers.

(c) The records of Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall at all times
identify such Securities as belonging to the Fund.

(d) If Securities purchased by the Fund are to be held in a Book-Entry
System or Securities Depository, Custodian shall pay for such Securities upon
(i) receipt of advice from the Book-Entry System or Securities Depository that
such Securities have been transferred to the Depository Account, and (ii) the
making of an entry on the records of Custodian to reflect such payment and
transfer for the account of the Fund. If Securities sold by the Fund are held
in a Book-Entry System or Securities Depository, Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or Securities
Depository that payment for such

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Securities has been transferred to the Depository Account, and (ii) the making
of an entry on the records of Custodian to reflect such transfer and payment for
the account of the Fund.

(e) Custodian shall provide the Fund with copies of any report (obtained by
Custodian from a Book-Entry System or Securities Depository in which Securities
of the Fund are kept) on the internal accounting controls and procedures for
safeguarding Securities deposited in such Book-Entry System or Securities
Depository.

(f) At its election, the Fund shall be subrogated to the rights of
Custodian with respect to any claim against a Book-Entry System or Securities
Depository or any other person for any loss or damage to the Fund arising from
the use of such Book-Entry System or Securities Depository, if and to the extent
that the Fund has not been made whole for any such loss or damage.

3.6 DISBURSEMENT OF MONEYS FROM THE CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, Custodian shall disburse moneys from the Custody Account
but only in the following cases:

(a) For the purchase of Securities for the Fund but only (i) in the case of
Securities (other than options on Securities, futures contracts and options on
futures contracts), against the delivery to Custodian (or any sub-custodian
appointed pursuant to Section 3.3 above) of such Securities registered as
provided in Section 3.9 below or in proper form for transfer or, if the purchase
of such Securities is effected through a Book-Entry System or Securities
Depository, in accordance with the conditions set forth in Section 3.5 above;
(ii) in the case of options on Securities, against delivery to Custodian (or
such sub-custodian) of such receipts as are required by the customs prevailing
among dealers in such options; (iii) in the case of futures contracts and
options on futures contracts, against delivery to Custodian (or such
sub-custodian) of evidence of title thereto in favor of the Fund, the Custodian,
any such sub-custodian or any nominee referred to in Section 3.9 below; and (iv)
in the case of repurchase or reverse repurchase agreements entered into by the
Fund, against delivery of the purchased Securities

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either in certificate form or through an entry crediting Custodian's account at
a Book-Entry System or Securities Depository with such Securities;

(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;

(d) In payment of the redemption price of Shares as provided in Article VI
below;

(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
interest, taxes, administration, investment management, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal fees; and
other operating expenses of the Fund; in all cases, whether or not such expenses
are to be in whole or in part capitalized or treated as deferred expenses;

(f) For transfer in accordance with the provisions of any agreement among
the Fund, Custodian and a broker-dealer, relating to compliance with rules of
The Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding escrow or
other arrangements in connection with transactions by the Fund;

(g) For transfer in accordance with the provisions of any agreement among
the Fund, Custodian, and a futures commission merchant, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding account deposits
in connection with transactions by the Fund;

(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including Custodian), so
long as the payment instructions to Custodian detail specific Securities to be
acquired;

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<PAGE>

(i) For the purchase from a bank or other financial institution of loan
participations, but only if Custodian has in its possession a copy of the
agreement between the Fund and such bank or other financial institution with
respect to the purchase of such loan participations; and

(j) For the purchase and sale of foreign currencies or options to purchase
and sell foreign currencies for spot and future delivery on behalf and for the
account of the Fund pursuant to contracts with such banks and other financial
institutions, including any sub-custodian and any affiliate of Custodian, as
principal, as are approved and authorized by the Fund, so long as the payment
instructions to Custodian detail aspecific assets to be acquired;

(k) For transfer to a broker-dealer registered under the 1934 Act or in
accordance with the provisions of any agreement among the Fund, Custodian and
such a broker-dealer as margin for a short sale of Securities;

(l) For the payment of the amounts of dividends received with respect to
Securities sold short; and

(m) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Trustees,
certified by an Officer, specifying the amount and purpose of such payment,
declaring such purpose to be a proper purpose of the Fund, and naming the person
or persons to whom such payment is to be made.

3.7 DELIVERY OF SECURITIES FROM THE CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, Custodian shall release and deliver Securities of the Fund
from the Custody Account but only in the following cases:

(a) Upon the sale of Securities for the account of the Fund but, subject to
Section 5.3 below, only against receipt of payment therefor in cash, by
certified or cashiers' check or bank credit;

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(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.5 above;

(c) To an offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such case, the
cash or other consideration is to be delivered to Custodian;

(d) To the issuer thereof or its agent (i) for transfer into the name of
the Fund or any of the nominees referred to in Section 3.9 below, or (ii) for
exchange for a different number of certificates or other evidence representing
the same aggregate face amount or number of units; provided that, in any such
case, the new Securities are to be delivered to Custodian;

(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;

(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to Custodian;

(g) Upon receipt of payment therefor pursuant to any repurchase agreement
entered into by the Fund;

(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities and cash,
if any, are to be delivered to Custodian;

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<PAGE>

(i) For delivery in connection with any loans of Securities pursuant to any
securities loan agreement entered into by the Fund, but only against receipt of
such collateral as is required under such securities loan agreement;

(j) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt by Custodian
of the amounts borrowed;

(k) Pursuant to any authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;

(l) For delivery in accordance with the provisions of any agreement among
the Fund, Custodian and a broker-dealer, relating to compliance with the rules
of The Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding escrow or
other arrangements in connection with transactions by the Fund;

(m) For delivery in accordance with the provisions of any agreement among
the Fund, Custodian, and a futures commission merchant, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding account deposits
in connection with transactions by the Fund; or

(n) For delivery to a broker-dealer-dealer registered under the 1934 Act or
in accordance with the provisions of any agreement among the Fund, Custodian and
such a broker-dealer as margin for a short sale of Securities;

(o) For delivery (by a Foreign Sub-custodian or an agent of Custodian) to
the depositary used by an issuer of American Depositary Receipts or
International Depositary Receipts (hereinafter collectively referred to as
"ADRs") for such Securities against a written receipt therefor adequately
describing such Securities and written evidence satisfactory to the Foreign Sub-
custodian or agent that the depositary has acknowledged receipt of instructions
to issue with

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<PAGE>

respect to such Securities ADRs in the name of the Custodian, or a nominee of
the Custodian, for delivery to the Custodian;

(p) To deliver ADRs to the issuer thereof against a written receipt
therefor adequately describing the ADR's delivered and written evidence
satisfactory to the Custodian that the issuer of the ADRs has acknowledged the
receipt of instructions to cause its depositary to deliver the Securities
underlying such ADRs to a Foreign Sub-custodian or agent of Custodian: or

(q) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Trustees,
certified by an Officer, specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Fund, and naming the person or persons to whom
delivery of such Securities is to be made.

3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise
instructed by the Fund, Custodian shall with respect to all Securities held for
the Fund:

(a) Subject to Section 10.4 below, collect on a timely basis all income and
other payments to which the Fund is entitled either by law or pursuant to custom
in the securities business;

(b) Subject to Section 10.4 below, collect on a timely basis the amount
payable upon or with respect to all Securities and other assets which may mature
or be called, redeemed, retired or otherwise become payable;

(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;

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(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect, and prepare and submit
reports to the Internal Revenue Service ("IRS") and to the Fund at such time, in
such manner and containing such information as is prescribed by the IRS;

(f) Hold for the Fund all rights and similar securities issued with respect
to Securities of the Fund; and

(g) In general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.

3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for the
Fund that are issuable only in bearer form shall be held by Custodian in that
form, provided that any such Securities shall be held in a Book-Entry System if
eligible therefor. All other Securities held for the Fund may be registered in
the name of Custodian as agent, any sub-custodian appointed pursuant to Section
3.3 above, any Securities Depository, any Foreign Sub-Custodian or Foreign
Securities Depository (in the case of Foreign Securities), or any nominee or
agent of any of them. The Fund shall furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register as in this Section 3.9 provided, any Securities delivered to
Custodian which are registered in the name of the Fund.

3.10 RECORDS. (a) Custodian shall maintain complete and accurate records
with respect to Securities, cash or other property held for the Fund, including
(i) journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting (A)
Securities in transfer, if any, (B) Securities in physical possession, (C)
monies and Securities borrowed and monies and Securities loaned (together with a
record of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related thereto. Custodian
shall

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keep such other books and records with respect to Securities, cash and other
property of the Fund which is held hereunder as the Fund may reasonably request.

(b) All such books and records maintained by Custodian shall (i) be
maintained in a form acceptable to the Fund and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Fund and at all times during the regular business hours of Custodian be made
available upon request for inspection by duly authorized officers, employees or
agents of the Fund and employees or agents of the Securities and Exchange
Commission, and (iii) if required to be maintained by Rule 31a-1 under the 1940
Act, be preserved for the periods prescribed in Rule 31a-2 under the 1940 Act.

3.11 REPORTS BY CUSTODIAN. Custodian shall furnish the Fund with a daily
activity statement, including a summary of all transfers to or from the Custody
Account, on the day following such transfers. At least monthly and from time to
time, Custodian shall furnish the Fund with a detailed statement of the
Securities and moneys held for the Fund under this Agreement.

3.12 OTHER REPORTS BY CUSTODIAN. Custodian shall provide the Fund with
such reports as the Fund may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding Securities which
are employed by Custodian or any sub-custodian appointed pursuant to Section 3.3
above.

3.13 PROXIES AND OTHER MATERIALS. Unless otherwise instructed by the Fund,
Custodian shall promptly deliver to the Fund (at the address set forth in
Article XVII below) all notices of meetings, proxies and proxy materials, which
it receives regarding Securities held in the Custody Account which do not
constitute Purchased Securities under the Master Repurchase Agreement. Before
delivering them to the Fund, Custodian shall cause all proxies relating to such
Securities which are not registered in the name of the Fund, or a nominee
thereof, to be promptly executed by the registered holder of such Securities,
without indication of the manner in which such proxies are to be voted. Unless
otherwise instructed by the Fund, neither

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Custodian nor any of its agents shall exercise any voting rights with respect to
Securities held hereunder.

3.14 INFORMATION ON CORPORATE ACTIONS. Custodian shall promptly transmit
to the Fund (at the address set forth in Article XVII below) all written
information received by Custodian from issuers of Securities held in the Custody
Account. With respect to tender or exchange offers for such Securities,
Custodian shall promptly transmit to the Fund all written information received
by it from the issuers of the Securities whose tender or exchange is sought and
by the party (or its agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange offer or other
similar transaction, the Fund shall notify Custodian (a) in the case of Foreign
Securities, such number of Business Days prior to the date on which Custodian is
to take such action as will allow Custodian to take such action in the relevant
local market in a timely fashion, and (b) in the case of all other Securities,
at least five Business Days prior to the date on which Custodian is to take such
action.

3.15 CO-OPERATION. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Fund to keep the books of
account of the Fund and/or to compute the value of the assets of the Fund.

ARTICLE IV
DUTIES OF CUSTODIAN WITH
RESPECT TO PROPERTY OF
THE FUND HELD OUTSIDE THE UNITED STATES

4.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. Custodian may appoint sub-
custodians pursuant to Section 3.3 hereof or Eligible Foreign Custodians in
accordance with Rule 17f-5 under the 1940 Act as Foreign Sub-custodians
hereunder for the Fund's Securities and other assets maintained outside the
United States. Upon receipt of Written Instructions from the Fund to do so, the
Custodian shall cease the employment of any Foreign Sub-custodian for
maintaining custody of the Fund's assets.

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4.2 ASSETS TO BE HELD. The Custodian shall limit the Securities and other
assets maintained in the custody of an Eligible Foreign Custodian to: (a)
Foreign Securities, and (b) cash and cash equivalents in such amounts as the
Fund may determine.

4.3 FOREIGN SECURITIES DEPOSITORIES. Custodian or any Foreign Sub-
custodian employed by it may maintain assets of the Fund in Foreign Securities
Depositories in accordance with Rule 17f-5 under the 1940 Act.

4.4 AGREEMENTS WITH FOREIGN SUB-CUSTODIANS. Fund shall approve in writing
(a) the appointment of each Foreign Sub-custodian and the agreement pursuant to
which the Custodian employs such Foreign Sub-custodian and (b) for the
appointment of each Eligible Foreign Custodian as a Foreign Sub-custodian, the
country or countries in which such Foreign Sub- custodian is authorized to hold
Securities, cash and other property of the Fund.

4.5 APPROVED FOREIGN SUB-CUSTODIANS. (a) Those Foreign Sub-custodians and
the countries where and the Foreign Securities Depositories through which they
or the Custodian may hold Securities, cash and other property of the Fund which
the Fund has approved to date are set forth on Exhibit D hereto. Exhibit D
shall be amended from time to time as Foreign Sub- custodians, countries and/or
Foreign Securities Depositories are changed, added or deleted. The Fund shall
be responsible for informing the Custodian sufficiently in advance of a proposed
investment which is to be held in a country not listed in Exhibit E in order to
allow the Fund to give the approval required by Section 4.4 hereof and for
Custodian to put the appropriate arrangements in place with a Foreign Sub-
custodian.

(b) If the Fund invests in a Security to be held pursuant to this Article
before the foregoing procedures have been completed, such Security may be held
by such agent as Custodian may select, and Custodian shall bear no liability to
Fund for the actions of such agent, except to the extent Custodian shall have
recovered from such agent for any damages caused to Fund by such agent.

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4.6 REPORTS BY CUSTODIAN. Custodian shall supply to the Fund from time to
time, as mutually agreed upon, reports in respect of the safekeeping of the
Securities and other assets of the Fund held by Foreign Sub-custodians,
including, but not limited to, advices or notifications of transfers of
Securities to or from the accounts maintained by Foreign Sub-custodians for the
Custodian on behalf of the Fund.

4.7 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Upon receipt of Proper
Instructions given in any of the cases specified in Section 3.7 above, Custodian
shall cause the Foreign Sub- custodians to transfer, exchange or deliver Foreign
Securities owned by the Fund, subject to all local laws, regulations, customs,
procedures and practices applicable in the relevant local market; and

(b) Upon receipt of Proper Instructions given in any of the cases specified
in Section 3.6 above, Custodian shall cause the Foreign Sub-custodians to pay
out monies of the Fund, subject to all local laws, regulations, customs,
procedures and practices applicable in the relevant local market.

4.8 LIABILITY OF FOREIGN SUB-CUSTODIANS. The agreement pursuant to which
the Custodian employs a Foreign Sub-custodian shall require such Foreign Sub-
custodian to exercise reasonable care in the performance of its duties and shall
hold such Foreign sub-custodian responsible for any direct loss or damage
arising out of any willful misfeasance, bad faith or negligence of such Foreign
Sub-custodian in the performance of its obligations under such agreement or out
of its reckless disregard of such obligations. At its election, the Fund shall
be subrogated to the rights of Custodian with respect to any claims against a
Foreign Sub-custodian as a consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any such loss or damage.

4.9 LIABILITY OF CUSTODIAN. Notwithstanding anything to the contrary in
Section 8.1 below or elsewhere in this Agreement, Custodian shall have no
greater liability to the Fund for the actions or omissions of any Foreign
Sub-custodian than any such Foreign Sub-custodian has to Custodian, and
Custodian shall not be required to discharge any such liability which may be

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imposed on it unless and until such Foreign Sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full. Custodian shall have no liability for any loss or damage
resulting from acts or omissions of any Foreign Sub-custodian arising out of or
caused, directly or indirectly, by circumstances beyond such Foreign Sub-
custodian's reasonable control, including, without limitation, sovereign risk,
as described in Section 8.7, or "force majeure", as covered in Article X.

4.10 MONITORING RESPONSIBILITIES. Upon the request of the Fund, Custodian
shall annually furnish to the Fund information concerning all Foreign Sub-
custodians hereunder which shall be similar in kind and scope to that furnished
to the Fund in connection with the initial approval by the Fund of the
agreements pursuant to which Custodian employs such Foreign Sub- custodians or
as otherwise required by Rule 17f-5 under the 1940 Act.

ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUND

5.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
Custodian shall upon receipt of such Securities purchased by the Fund pay out of
the moneys held for the account of the Fund the total amount specified in such
Written Instructions to the person named therein. Custodian shall not be under
any obligation to pay out moneys to cover the cost of a purchase of Securities
or other assets for the Fund if there is insufficient cash available in the
Custody Account.

5.2 SALE OF SECURITIES. Promptly upon each sale of Securities by the
Fund, Written Instructions shall be delivered to Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom

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such Securities are to be delivered. Upon receipt of the total amount payable
to the Fund as specified in such Written Instructions, Custodian shall deliver
such Securities to the person specified in such Written Instructions. Subject
to the foregoing, Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.

5.3 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 5.2 above or any
other provision of this Agreement and subject, in the case of Foreign
Securities, to all local laws, regulations, customs, procedures and practices
applicable in the relevant local market, Custodian, when instructed to deliver
Securities against payment, shall be entitled, but only if in accordance with
generally accepted market practice, to deliver such Securities prior to actual
receipt of final payment therefor and, exclusively in the case of Securities in
physical form, to deliver such Securities prior to receipt of payment. In any
such case, the Fund shall bear the risk that final payment for such Securities
may not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and Custodian
shall have no liability for any of the foregoing.

5.4 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from
time to time, Custodian may credit the Custody Account, prior to actual receipt
of final payment thereof, with (a) proceeds from the sale of Securities which it
has been instructed to deliver against payment, (b) proceeds from the redemption
of Securities or other assets of the Fund, and (c) income from cash, Securities
or other assets of the Fund. Any such credit shall be conditional upon actual
receipt by Custodian of final payment and may be reversed if final payment is
not actually received in full. Custodian may, in its sole discretion and from
time to time, permit the Fund to use funds so credited to the Custody Account in
anticipation of actual receipt of final payment. Any such funds shall be
repayable immediately upon demand made by Custodian at any time prior to the
actual receipt of all final payments in anticipation of which funds were
credited to the Custody Account.

5.5 ADVANCES BY CUSTODIAN FOR SETTLEMENT. Custodian may, in its sole
discretion and from time to time, advance funds to the Fund to facilitate the
settlement of the Fund's

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transactions in the Custody Account. Any such advance (a) shall be repayable
immediately upon demand made by Custodian, (b) shall be fully secured as
provided in Section 11.3 below, and (c) shall bear interest at such rate, and be
subject to such other terms and conditions, as the Fund and Custodian may agree.

5.6 FINAL PAYMENT. For purposes of this Agreement, "final payment" means
payment in funds which are (or have become) immediately available, under
applicable law are irreversible, and are not subject to any security interest,
levy, lien or other encumbrance.

ARTICLE VI
REDEMPTION OF FUND SHARES

6.1 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the Custody Account, and upon receipt of Proper Instructions specifying that
the funds are required to redeem Shares on account of the Fund, Custodian shall
wire each amount specified in such Proper Instructions to or through such bank
as the Fund may designate therein with respect to such amount.

6.2 NO DUTY REGARDING PAYING BANKS. Custodian shall not be responsible for
the payment or distribution by any bank designated in Proper Instructions given
pursuant to Section 6.1 above of any amount paid by Custodian to such bank in
accordance with such Proper Instructions.

ARTICLE VII
SEGREGATED ACCOUNTS

Upon receipt of Proper Instructions, Custodian shall establish and maintain
a segregated account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,

(a) in accordance with the provisions of any agreement among the Fund,
Custodian and a broker-dealer (or any futures commission merchant, relating to
compliance with the rules of

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<PAGE>

The Options Clearing Corporation or of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Fund,

(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund,

(d) for purposes of compliance by the Fund with requirements under the 1940
Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions, and

(e) for other proper purposes, but only upon receipt of, in addition to
Proper Instructions, a copy of a resolution of the Board of Trustees, certified
by an Officer, setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper purposes of the Fund.

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<PAGE>

ARTICLE VIII
SECURITIES LENDING TRANSACTIONS

8.1 TRANSACTIONS. If and to the extent that the necessary funds and
Securities have been entrusted to it under this Agreement (and unless the Fund
gives it Proper Instructions to do otherwise), Custodian from time to time shall
make for the account of the Fund the transfers of funds and deliveries of
Securities which the Fund is required to make pursuant to the Securities Loan
Agreement, subject to the limitation on such investments set forth in the Fund's
Registration Statement, and shall receive for the account of the Fund the
transfers of funds and deliveries of Securities which the borrower under the
Securities Loan Agreement is required to make pursuant thereto. Custodian shall
make and receive all such transfers and deliveries pursuant to, and subject to
the terms and conditions of, the Securities Loan Agreement.

8.2 COLLATERAL; EVENTS OF DEFAULT. Custodian shall daily mark to market,
in the manner provided for in the Securities Loan Agreement and consistent with
the pricing procedures set forth in the Fund's prospectus, all loans of
Securities which may from time to time be outstanding thereunder. Custodian
shall promptly notify the Fund of any default under the Securities Loan
Agreement (as such term "default" is defined therein) of which it has actual
knowledge.

8.3 SECURITIES LOAN AGREEMENT. Custodian hereby acknowledges its receipt
from the Fund of a copy of the Securities Loan Agreement. The Fund shall provide
Custodian, prior to the effectiveness thereof, with a copy of any amendment to
the Securities Loan Agreement.

ARTICLE IX
REPURCHASE TRANSACTIONS

9.1 TRANSACTIONS. If and to the extent that the funds and Securities have
been entrusted to it under this Agreement (and unless the Fund gives it Proper
Instructions to do otherwise), Custodian from time to time shall make for the
account of the Fund the transfers of funds and deliveries of Securities which
the Fund is required to make pursuant to the Master Repurchase Agreement,
subject to the limitation on such investments set forth in the Fund's

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<PAGE>

Registration Statement, and shall receive for the account of the Fund the
transfers of funds and deliveries of Securities which the seller under the
Master Repurchase Agreement is required to make pursuant thereto. Custodian
shall make and receive all such transfers and deliveries pursuant to, and
subject to the terms and conditions of, the Master Repurchase Agreement.

9.2 COLLATERAL; EVENTS OF DEFAULT. Custodian shall daily mark to market,
in a manner consistent with the pricing procedures set forth in the Fund's
prospectus, the Securities purchased by the Fund under the Master Repurchase
Agreement and held in the Custody Account, and shall give to the seller
thereunder any such notice as may be required by the Master Repurchase Agreement
in connection with such mark-to-market. Custodian shall promptly notify the
Fund of any event of default by the seller under the Master Repurchase Agreement
(as such term "event of default" is defined therein) of which it has actual
knowledge.

9.3 MASTER REPURCHASE AGREEMENT. Custodian hereby acknowledges its
receipt from the Fund of a copy of the Master Repurchase Agreement. The Fund
shall provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.

ARTICLE X
CONCERNING THE CUSTODIAN

10.1 STANDARD OF CARE. Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Fund for any loss, damages, cost, expense (including
attorneys' fees and disbursements), liability or claim which does not arise from
willful misfeasance, bad faith or negligence on the part of Custodian or
reckless disregard by Custodian of its obligations under this Agreement.
Custodian shall be entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. In no event shall Custodian be liable for
special or consequential damages or be liable in any manner whatsoever for any
action taken or omitted upon instructions from the Fund or any agent of the
Fund. Custodian shall not be under any obligation at any time to ascertain
whether the Fund is in

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compliance with the 1940 Act, the regulations thereunder, the provisions of its
charter documents or by-laws, or its investment objectives and policies as in
effect from time to time.

10.2 ACTUAL COLLECTION REQUIRED. Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until Custodian or its agents actually receive such cash or collect on such
instrument.

10.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that
it is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any property or evidence of title thereto
received or delivered by it or its agents.

10.4 LIMITATION ON DUTY TO COLLECT. Custodian shall promptly notify the
Fund whenever any money or property due and payable from or on account of any
Securities held hereunder for the Fund is not timely received by it. Custodian
shall not, however, be required to enforce collection, by legal means or
otherwise, of any such money or other property not paid when due, but shall
receive the proceeds of such collections as may be effected by it or its agents
in the ordinary course of Custodian's custody and safekeeping business or of the
custody and safekeeping business of such agents.

10.5 EXPRESS DUTIES ONLY. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account and is not a
fiduciary to the Fund.

10.6 NO LIABILITY FOR SOVEREIGN RISK. Custodian shall not be liable for
any loss involving any Securities, currencies, deposits or other property of the
Fund, whether maintained by it, a Foreign Sub-Custodian, a Foreign Securities
Depository, an agent of Custodian or a Foreign Sub-Custodian or a bank, or for
any loss arising from a foreign currency transaction or contract, where the loss
results from a sovereign risk or where the entity maintaining such

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<PAGE>

Securities, currencies, deposits or other property of the Fund, whether
Custodian, a Foreign Sub- Custodian, a Foreign Securities Depository, an agent
of Custodian or a Foreign Sub-Custodian or a bank, has exercised reasonable care
maintaining such property or in connection with the transaction involving such
property. For purposes of this Agreement, "sovereign risk" shall mean
nationalization, expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental authority, de
facto or de jure; or enactment, promulgation, imposition or enforcement by any
such governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's property; or acts of war,
terrorism, insurrection or revolution; or any other act or event beyond the
control of the Foreign Sub-custodian, the Foreign Securities Depository or the
agent of any of them.

ARTICLE XI
INDEMNIFICATION

11.1 INDEMNIFICATION. The Fund shall indemnify and hold harmless
Custodian, any sub-custodian and any nominee of Custodian or any sub-custodian
and any nominee of Custodian, from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking laws) or claim
arising directly or indirectly (a) from the fact that Securities are registered
in the name of any such nominee, or (b) from any action or inaction by Custodian
or such sub-custodian or other agent (i) at the request or direction of or in
reliance on the advice of the Fund or any of its agents, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement, provided that Custodian, any sub-custodian or any nominee of
either of them shall not be indemnified and held harmless from and against any
such loss, damage, cost, expense, liability or claim arising from Custodian's
willful misfeasance, bad faith, negligence or reckless disregard of its
obligations under this Agreement or, in the case of any sub-custodian or its
nominee, from such sub-custodian's willful misfeasance, bad faith, negligence or
reckless disregard of its obligations under the agreement under which it is
acting.

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<PAGE>

11.2 INDEMNITY TO BE PROVIDED. If the Fund requests Custodian to take any
action with respect to Securities, which may, in the opinion of Custodian,
result in Custodian or its nominee becoming liable for the payment of money or
incurring liability of some other form, Custodian shall not be required to take
such action until the Fund shall have provided indemnity therefor to Custodian
in an amount and form satisfactory to Custodian.

11.3 SECURITY. As security for the payment of any present or future
obligation or liability of any kind which the Fund may have to Custodian with
respect to or in connection with the Custody Account or this Agreement, the Fund
hereby pledges to Custodian all cash, securities and other property of every
kind which is in the Custody Account or otherwise held for the Fund pursuant to
this Agreement, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such cash, securities and other property.

ARTICLE XII
FORCE MAJEURE

Neither Custodian nor the Fund shall be liable for any failure or delay in
the performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation.

ARTICLE XIII
REPRESENTATIONS AND WARRANTIES

Each of the Fund and Custodian represents and warrants for itself that (a)
it has all necessary power and authority to perform its obligations hereunder,
(b) the execution and delivery by it of this Agreement, and the performance by
it of its obligations under this

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<PAGE>

Agreement, have been duly authorized by all necessary action and will not
violate any law, regulation, charter, by- law, or other instrument, restriction
or provision applicable to it or by which it is bound, and (c) this Agreement
constitutes a legal, valid and binding obligation of it, enforceable against it
in accordance with its terms.

ARTICLE XIV
COMPENSATION OF CUSTODIAN

The Fund shall pay Custodian such fees and charges as are set forth in the
fee schedule annexed hereto as Schedule B, as such fee schedule may from time to
time be revised by Custodian upon 14 days' prior written notice to the Fund.
Any annual fee or other charges payable by the Fund shall be paid monthly by
automatic deduction from the Custody Account. Expenses incurred by Custodian in
the performance of its services hereunder, and all other proper charges and
disbursements of the Custody Account, shall be charged to the Custody Account by
Custodian and paid therefrom.

ARTICLE XV
TAXES

Any and all taxes, including any interest and penalties with respect
thereto, which may be levied or assessed under present or future laws or in
respect of the Custody Account or any income thereof shall be charged to the
Custody Account by Custodian and paid therefrom.

ARTICLE XVI
AUTHORIZED PERSONS

16.1 AUTHORIZED PERSONS. Custodian may rely upon and act in accordance
with any notice, confirmation, instruction or other communication received by it
from the Fund which is reasonably believed by Custodian to have been given or
signed on behalf of the Fund by one of the Authorized Persons designated by the
Fund in Exhibit A hereto, as it may from time to time be revised. The Fund may
revise Exhibit A hereto at any time by notice in writing to Custodian

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<PAGE>

given in accordance with Article XV below, but no revision of Exhibit A hereto
shall be effective until Custodian actually receives such notice.

14.2 INVESTMENT ADVISERS. Custodian may also act in accordance with any
Written or Oral Instructions which are reasonably believed by Custodian to have
been given or signed by one of the persons designated from time to time by any
of the investment advisers of the Fund specified in Exhibit B hereto (if any) as
it may from time to time be revised. The Fund may revise Exhibit B hereto at
any time by notice in writing to Custodian given in accordance with Article XV
below, and each investment adviser specified in Exhibit B hereto (if any) may at
any time by like notice designate an Authorized Person or remove an Authorized
Person previously designated by it, but no revision of Exhibit B hereto (if any)
and no designation or removal by such investment adviser shall be effective
until Custodian actually receives such notice.

16.3 ORAL INSTRUCTIONS. Custodian may rely upon and act in accordance
with Oral Instructions (as defined in Section 1.12 above). If Written
Instructions confirming Oral Instructions are not received by Custodian prior to
a transaction, it shall in no way affect the validity of the transaction
authorized by such Oral Instructions or the authorization of the Fund to effect
such transaction. Custodian shall incur no liability to the Fund in acting upon
Oral Instructions (as defined in Section 1.12 above). To the extent such Oral
Instructions vary from any confirming Written Instructions, Custodian shall
advise the Fund of such variance but unless confirming Written Instructions are
timely received, such Oral Instructions will govern.

ARTICLE XVII
NOTICES

Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be sent, delivered or given to
the recipient at the address set forth after its name hereinbelow:

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<PAGE>

IF TO THE FUND:

________________________________
________________________________
________________________________
Attention:______________________
Telephone:______________________
Facsimile:______________________

IF TO CUSTODIAN:

Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: VICE PRESIDENT - TRUST OPERATIONS
Telephone: (609) 951-2320
Facsimile: (609) 951-2327

or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XVII.

ARTICLE XVIII
TERMINATION

Either party hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than ninety (90) days after the date of the giving of such notice.
Upon the date set forth in such notice this Agreement shall terminate, and
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date (a) deliver directly to the successor custodian or its
agents all Securities (other than Securities held in a Book-Entry System,
Securities Depository or Foreign Securities Depository) and cash then owned by
the Fund and held by Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System, Securities Depository or Foreign Securities
Depository to an account of or for the benefit of the Fund, provided that the
Fund shall have paid to Custodian all fees, expenses and other amounts to the
payment or reimbursement of which it shall then be entitled.

ARTICLE XIX
MISCELLANEOUS

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<PAGE>

19.1 BUSINESS DAYS. Nothing contained in this Agreement shall require
Custodian to perform any function or duties on a day other than a Business Day.

19.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.

19.3 REFERENCES TO CUSTODIAN. The Fund shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Fund shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.

19.4 NO WAIVER. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.

19.5 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.

19.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.

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<PAGE>

19.7 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.

19.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; PROVIDED, HOWEVER, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 19.8 shall be void.

19.9 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its representative thereunto duly
authorized, all as of the day and year first above written.

[NAME OF CUSTOMER]

By
------------------------------------
Authorized Officer

CUSTODIAL TRUST COMPANY

By
------------------------------------
Authorized Officer

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<PAGE>

EXHIBIT A

AUTHORIZED PERSONS

Set forth below are the names and specimen signatures of the persons
authorized by the Fund to administer the Custody Account.

NAME SIGNATURE

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

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

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<PAGE>

EXHIBIT B
INVESTMENT ADVISERS

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<PAGE>

EXHIBIT C

CUSTODY FEES AND TRANSACTION CHARGES

DOMESTIC FEES. The Fund shall pay Custodian the following fees and charges
for assets in the United States ("Domestic Assets") and transactions in the
United States, all such fees and charges to be payable monthly:

(1) an annual fee of 0.__% (___ basis point) per annum of the value of the
Domestic Assets in the Custody Account, such fee to be payable monthly based
upon the total market value of such Domestic Assets as determined on the last
Business Day of the month for which such fee is charged;

(2) a transaction charge of $__ for each buy, sell or redemption
transaction executed in the Custody Account with respect to such Domestic Assets
as are book-entry Securities (but not for any such buy or sell in a repurchase
transaction representing a cash sweep investment for the Fund's account or the
investment by the Fund of collateral for a loan of Securities);

(3) a transaction charge of $__ for each receipt or delivery into or from
the Custody Account of such Domestic Assets as are Securities in physical form;

(4) a transaction charge for each repurchase transaction in the Custody
Account which represents a cash sweep investment for the Fund's account,
computed at a rate of 0.10% (ten basis points) per annum on the amount of the
purchase price paid or received by the Fund in such repurchase transaction;

(5) a charge of $10 for each funds transfer; and

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<PAGE>

(6) a service charge for each holding of Domestic Assets consisting of
Securities or other property sold by way of private placement or in such other
manner as to require services by Custodian which in the reasonable judgment of
Custodian are materially in excess of those ordinarily required for the holding
of publicly traded Securities in the United States.

INTERNATIONAL FEES. The Fund shall pay Custodian fees for assets outside
the United States ("Foreign Assets") and transaction charges and other charges
(including, without limitation, charges for funds transfers, tax reclaims, and
foreign exchange services) outside the United States, all such fees and charges
to be payable monthly, according to a schedule of such fees and charges specific
to each country in which Foreign Assets are held, such schedule to be provided
from time to time upon request.

Fees shall be based upon the total market value of the applicable Foreign
Assets as determined on the last Business Day of the month for which such fees
are charged.

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<PAGE>

EXHIBIT D

APPROVED FOREIGN SUB-CUSTODIANS

Foreign Sub-custodian Country(ies) Securities Depositories
- --------------------- ------------ -----------------------

<PAGE>

TRANSFER AGENCY AND SERVICES AGREEMENT

THIS AGREEMENT, dated as of this 4th day of December, 1994, is by and
between NORTHSTAR ADVANTAGE TRUST (the "Fund"), organized under the laws of
Massachusetts and having its principal place of business at Two Pickwick Plaza,
Greenwich, Connecticut 06830 and THE SHAREHOLDER SERVICES GROUP, INC. (the
"Transfer Agent"), a Massachusetts corporation with principal offices at One
Exchange Place, 53 State Street, Boston, Massachusetts 02109.

WITNESSETH

WHEREAS, the Fund is authorized to issue Shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;

WHEREAS, the Fund initially intends to offer shares in those Portfolios
identified in the attached Exhibit 1, each such Portfolio, together with all
other Portfolios subsequently established by the Fund shall be subject to this
Agreement in accordance with Section 16;

WHEREAS, the Fund on behalf of the Portfolios, desires to appoint the
Transfer Agent as its transfer agent, dividend disbursing agent and agent in
connection with certain other activities and the Transfer Agent desires to
accept such appointment;

NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:

Article 1 DEFINITIONS

1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended from
time to time.

(b) "Authorized Person" shall be deemed to include (i) any authorized
officer of the Fund; or (ii) any person, whether or not such person is an
officer or employee of the Fund, duly authorized to give Oral Instructions
or Written Instructions on behalf of the Fund as indicated in writing to
the Transfer Agent from time to time.

<PAGE>

(d) "Commission" shall mean the Securities and Exchange Commission.

(e) "Custodian" refers to any custodian or subcustodian of securities
and other property which the Fund may from time to time deposit, or cause
to be deposited or held under the name or account of such a custodian
pursuant to a Custodian Agreement.

(f) "1940 Act" shall mean the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, all as amended from time to
time.

(g) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by the Transfer Agent from a person
reasonably believed by the Transfer Agent to be an Authorized Person;

(h) "Portfolio" shall mean each separate series of shares offered by
the Fund representing interest in a separate portfolio of securities and
other assets;

(h) "Prospectus" shall mean the most recently dated Fund Prospectus
and Statement of Additional Information, including any supplements thereto
if any, which has become effective under the Securities Act of 1933 and the
1940 Act.

(i) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of each
respective Portfolio of the Fund as may be issued from time to time.

(j) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.

(k) "Written Instructions" shall mean a written communication signed
by a person reasonably believed by the Transfer Agent to be an Authorized
Person and actually received by the Transfer Agent. Written Instructions
shall include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original or
other process.

Article 2 APPOINTMENT OF THE TRANSFER AGENT

2.1 The Fund, on behalf of the Portfolios, hereby appoints and constitutes
the Transfer Agent as transfer agent and dividend disbursing agent for Shares of
each respective Portfolio of the Fund and as shareholder servicing agent for the
Fund and the Transfer Agent hereby accepts such appointments and agrees to
perform the duties hereinafter set forth.

Article 3 DUTIES OF THE TRANSFER AGENT

3.1 The Transfer Agent shall be responsible for:

<PAGE>

(a) Administering and/or performing the customary services of a
transfer agent; service agent in connection with dividend and distribution
functions; and for performing shareholder account and administrative agent
functions in connection with the issuance, transfer and redemption or
repurchase (including coordination with the Custodian) of Shares of each
Portfolio, as more fully described in the written schedule of Duties of the
Transfer Agent annexed hereto as Schedule A and incorporated herein, and in
accordance with the terms of the Prospectus of the Fund on behalf of the
applicable Portfolio, applicable law and the procedures established from
time to time between the Transfer Agent and the Fund.

(b) Recording the issuance of Shares and maintaining pursuant to SEC
Rule 17Ad-10(e) a record of the total number of Shares of each Portfolio
which are authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Transfer Agent shall provide the Fund on a
regular basis with the total number of Shares of each Portfolio which are
authorized and issued and outstanding and shall have no obligation, when
recording the issuance of Shares, to monitor the issuance of such Shares or
to take cognizance of any laws relating to the issue or sale of such
Shares, which functions shall be the sole responsibility of the Fund.

(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares, or
the propriety of the amount to be paid therefor; (iii) the legality of the
declaration of any dividend by the Board of Directors, or the legality of
the issuance of any Shares in payment of any dividend; or (iv) the legality
of any recapitalization or readjustment of the Shares.

3.2 In addition, the Fund shall (i) identify to the Transfer Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Transfer Agent for the
Fund's blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.

3.3 In addition to the duties set forth herein, the Transfer Agent shall
perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and the Transfer Agent.

Article 4 RECORDKEEPING AND OTHER INFORMATION

4.1 The Transfer Agent shall create and maintain all records required of
it pursuant to its duties hereunder and as set forth in Schedule A in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the 1940 Act. All records shall

<PAGE>

be available during regular business hours for inspection and use by the Fund.
Where applicable, such records shall be maintained by the Transfer Agent for the
periods and in the places required by Rule 31a-2 under the 1940 Act.

4.2 To the extent required by Section 31 of the 1940 Act, the Transfer
Agent agrees that all such records prepared or maintained by the Transfer Agent
relating to the services to be performed by the Transfer Agent hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such section, and will be surrendered promptly to the Fund on
and in accordance with the Fund's request.

4.3 In case of any requests or demands for the inspection of Shareholder
records of the Fund, the Transfer Agent will endeavor to notify the Fund of such
request and secure Written Instructions as to the handling of such request. The
Transfer Agent reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to comply with such request.

4.4 Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Fund, or any person retained by the Fund as may
be necessary for the Fund to evaluate the quality of the services performed by
the Transfer Agent pursuant hereto.

Article 5 FUND INSTRUCTIONS

5.1 The Transfer Agent will have no liability when acting upon Written or
Oral Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. The Transfer Agent will also have no liability when processing Share
certificates which it reasonably believes to bear the proper manual or facsimile
signatures of the officers of the Fund and the proper countersignature of the
Transfer Agent.

5.2 At any time, the Transfer Agent may request Written Instructions from
the Fund and may seek advice from legal counsel for the Fund, or its own legal
counsel, with respect to any matter arising in connection with this Agreement,
and it shall not be liable for any action taken or not taken or suffered by it
in good faith in accordance with such Written Instructions or in accordance with
the opinion of counsel for the Fund or for the Transfer Agent. Written
Instructions requested by the Transfer Agent will be provided by the Fund within
a reasonable period of time.

5.3 The Transfer Agent, its officers, agents or employees, shall accept
Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect the Transfer Agent's right
to rely on Oral

<PAGE>

Instructions.

Article 6 COMPENSATION

6.1 The Fund on behalf of each of the Portfolios will compensate the
Transfer Agent for the performance of its obligations hereunder in accordance
with the fees set forth in the written Fee Schedule annexed hereto as Schedule B
and incorporated herein.

6.2 In addition to those fees set forth in Section 6.1 above, the Fund on
behalf of each of the Portfolios agrees to pay, and will be billed separately
for, out-of-pocket expenses incurred by the Transfer Agent in the performance of
its duties hereunder. Out-of-pocket expenses shall include, but shall not be
limited to, the items specified in the written schedule of out-of-pocket charges
annexed hereto as Schedule C and incorporated herein. Schedule B may be
modified by written agreement between the parties. Unspecified out-of-pocket
expenses shall be limited to those out-of-pocket expenses reasonably incurred by
the Transfer Agent in the performance of its obligations hereunder.

6.3 The Fund on behalf of each of the Portfolios agrees to pay all fees
and out-of-pocket expenses within fifteen (15) days following the receipt of the
respective invoice.

6.4 Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule B, a revised Fee Schedule executed and dated by the
parties hereto.

Article 7 DOCUMENTS

7.1 In connection with the appointment of the Transfer Agent, the Fund
shall, on or before the date this Agreement goes into effect, but in any case
within a reasonable period of time for the Transfer Agent to prepare to perform
its duties hereunder, deliver or caused to be delivered to the Transfer Agent
the documents set forth in the written schedule of Fund Documents annexed hereto
as Schedule D.

Article 8 TRANSFER AGENT SYSTEM

8.1 The Transfer Agent shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by the Transfer Agent in connection with
the services provided by the Transfer Agent to the Fund herein (the "Transfer
Agent System").

8.2 The Transfer Agent hereby grants to the Fund a limited license to the
Transfer Agent System for the sole and limited purpose of having the Transfer
Agent provide the services contemplated hereunder and nothing contained in this
Agreement shall be construed or interpreted otherwise and such license shall
immediately terminate with the termination of this Agreement.

<PAGE>

Article 9 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT

9.1 The Transfer Agent represents and warrants to the Fund that:

(a) It is a corporation duly organized an existing and in good
standing under the laws of the Commonwealth of Massachusetts;

(b) It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;

(d) It is duly registered with its appropriate regulatory agency as a
transfer agent and such registration will remain in effect for the duration
of this Agreement;

(e) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement.

Article 11 REPRESENTATIONS AND WARRANTIES OF THE FUND

11.1 The Fund represents and warrants to the Transfer Agent that:

(a) It is duly organized and existing and in good standing under the
laws of the jurisdiction in which it is organized;

(b) It is empowered under applicable laws and by its Article of
Incorporation and By-Laws to enter into this Agreement;

(c) All corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to authorized it
to enter into this Agreement;

(d) A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective and will
remain effective, and all appropriate state securities law filings have
been made and will continue to be made, with respect to all Shares of the
Fund being offered for sale;

(e) All outstanding Shares are validly issued, fully paid and
non-assessable. When Shares are hereafter issued in accordance with the
terms of the Fund's Articles of Incorporation and its Prospectus with
respect to each Portfolio, such Shares shall be validly issued, fully paid
and non-assessable; and

<PAGE>

Article 12 INDEMNIFICATION

12.1 The Transfer Agent shall not be responsible for and the Fund on
behalf of each Portfolio shall indemnify and hold the Transfer Agent harmless
from and against any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of any sort
or kind which may be asserted against the Transfer Agent or for which the
Transfer Agent may be held to be liable (a "Claim") arising out of or
attributable to any of the following:

(a) Any actions of the Transfer Agent required to be taken pursuant
to this Agreement unless such Claim resulted from a negligent act or
omission to act or bad faith by the Transfer Agent in the performance of
its duties hereunder.

(b) The Transfer Agent's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by the Transfer Agent from the Fund, or any authorized third party
acting on behalf of the Fund, including but not limited the prior transfer
agent for the Fund, in the performance of the Transfer Agent's duties and
obligations hereunder.

(c) The reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of the Fund on behalf of
the applicable Portfolio.

(d) The offer or sales of shares in violation of any requirement
under the securities laws or regulations of any state that such shares be
registered in such state or in violation of any stop order or other
determination or ruling by any state with respect to the offer or sale of
such shares in such state.

(e) The Fund's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the Fund's negligence or
misconduct or the breach of any representation or warranty of the Fund made
herein.

12.2 In any case in which the Fund may be asked to indemnify or hold the
Transfer Agent harmless, the Transfer Agent will notify the Fund promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Fund although the failure to do
so shall not prevent recovery by the Transfer Agent and shall keep the Fund
advised with respect to all developments concerning such situation. The Fund
shall have the option to defend the Transfer Agent against any Claim which may
be the subject of this indemnification, and, in the event that the Fund so
elects, such defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Transfer Agent, and thereupon the Fund shall take over
complete defense of the Claim and the Transfer Agent shall sustain no further
legal or other expenses in respect of such Claim. The Transfer Agent will not
confess any Claim or make any compromise in any case in which the Fund will be
asked to provide indemnification, except with the Fund's prior written consent.
The obligations of the parties hereto under this Section

<PAGE>

shall survive the termination of this Agreement.

Article 13 STANDARD OF CARE

13.1 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within commercially reasonable limits to ensure the
accuracy of all services performed under this Agreement, but assume no
responsibility for loss or damage to the Fund unless said errors are caused by
the Transfer Agent's own negligence, bad faith or willful misconduct or that of
its employees.

13.2 Notwithstanding the foregoing Section 12(a) or anything else
contained in this Agreement to the contrary, the Transfer Agent's entire
liability to the Fund for any loss or damage, direct or indirect for any cause
whatsoever (including but not limited to those arising out of this Agreement),
and regardless of the form of action, shall be limited to one million dollars
($1,000,000) per Portfolio (maximum three Portfolios).

Article 14 CONSEQUENTIAL DAMAGES

14.1 In no event and under no circumstances shall either party to this
Agreement be liable to the other party for consequential or indirect loss of
profits, reputation or business or any other special damages under any provision
of this Agreement or for any act or failure to act hereunder.

Article 15 TERM AND TERMINATION

15.1 This Agreement shall be effective on the date first written above and
shall continue for a period of five (5) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of three (3) years
("Renewal Terms") each.

15.2 Either party may terminate this Agreement at the end of the Initial
Term or any subsequent Renewal Term upon not less than ninety (90) days or more
than one-hundred eighty (180) days prior written notice to the other party.

15.3 In the event a termination notice is given by the Fund, all expenses
associated with movement of records and materials and conversion thereof to a
successor transfer agent will be borne by the Fund.

15.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If the Transfer Agent is the Non-Defaulting Party, its
termination of this Agreement shall not constitute a waiver of any other rights
or remedies of the Transfer Agent with

<PAGE>

respect to services performed prior to such termination or rights of the
Transfer Agent to be reimbursed for out-of-pocket expenses. In all cases,
termination by the Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this Agreement or
otherwise against the Defaulting Party.

Article 16 ADDITIONAL PORTFOLIOS

16.1 In the event that the Fund establishes and/or advises one or more
Portfolios in addition to those identified in Exhibit 1, with respect to which
the Fund desires to have the Transfer Agent render services as transfer agent
under the terms hereof, the Fund shall so notify the Transfer Agent in writing,
and if the Transfer Agent agrees in writing to provide such services, Exhibit 1
shall be amended to include such additional Portfolios.

Article 17 CONFIDENTIALITY

17.1 In connection with the services provided by the Transfer Agent
hereunder, certain confidential and proprietary information regarding the
Transfer Agent and the Fund may be disclosed to the other. In connection
therewith, the parties agree as follows:

(a) Confidential Information disclosed under this Agreement shall
mean:

(i) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating
to the past, present or future business activities of the Transfer
Agent or the Fund, their respective parent corporation, their
respective subsidiaries and affiliated companies and the customers,
clients and suppliers of any of the foregoing;

(ii) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Transfer
Agent or the Fund a competitive advantage over its competitors; and

(iii) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.

(b) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment,
prototypes and models, and any other tangible manifestation of the
foregoing which now exist or come into the control or possession of

<PAGE>

the party.

17.2 Except as expressly authorized by prior written consent of the
disclosing party ("Discloser"), the party receiving Confidential Information
("Recipient") shall:

(a) limit access to Discloser's Confidential Information to
Recipient's employees who have a need-to-know in connection with the
subject matter thereof;

(b) advise those employees who have access to the Confidential
Information of the proprietary nature thereof and of the obligations set
forth in this Confidentiality Agreement;

(c) take appropriate action by instruction or agreement with the
employees having access to Discloser's Confidential Information to fulfill
Recipient's obligations under this Confidentiality Agreement;

(d) safeguard all of Discloser's Confidential Information by using a
reasonable degree of care, but not less than that degree of care used by
Recipient in safeguarding its own similar information or material;

(e) use all of Discloser's Confidential Information solely for
purposes that it was intended;

(f) not disclose any of Discloser's Confidential Information to third
parties; and

(g) not disclose the existence of the discussions to any third party.

17.3 Upon Discloser's request, Recipient shall surrender to Discloser all
memoranda, notes, records, drawings, manuals, records, and other documents or
materials (and all copies of same) relating to or containing Discloser's
Confidential Information. When Recipient returns the materials, Recipient shall
certify in writing that it has returned all materials containing or relating to
the Confidential Information.

17.4 The obligations of confidentiality and restriction on use in this
Article 16 shall not apply to any Confidential Information that Recipient
proves:

(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of Recipient; or

(b) Was lawfully received by Recipient from a third party free of any
obligation of confidence to the third party; or

<PAGE>

(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not limited
to, giving Discloser as much advance notice as practical of the possibility
of disclosure to allow Discloser to stop such disclosure or obtain a
protective order concerning such disclosure; or

(e) Is subsequently and independently developed by Recipient's
employees, consultants or agents without reference to Confidential
Information.

17.5 The Fund and the Transfer Agent agree that money damages would not be
a sufficient remedy for breach of this Section 17. Accordingly, in addition to
all other remedies that either party may have, a party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any breach of this Agreement. The parties agree to waive any requirement for a
bond in connection with any such injunctive or other equitable relief.

Article 18 FORCE MAJEURE

18.1 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, labor difficulties,
mechanical breakdowns, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.

Article 19 AMENDMENTS

19.1 This Agreement may only be amended or modified by a written
instrument executed by both parties.

Article 20 SUBCONTRACTING

20.1 The Fund agrees that the Transfer Agent may, in its discretion,
subcontract for certain of the services described under this Agreement or the
Schedules hereto; provided that the appointment of any such Transfer Agent shall
not relieve the Transfer Agent of its responsibilities hereunder.

Article 21 ARBITRATION

21.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.

21.2 The parties hereby agree that judgment upon the award rendered by the
arbitrator

11
<PAGE>

may be entered in any court having jurisdiction.

21.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Section 20.

Article 22 NOTICE

22.1 Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or the Transfer Agent, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.

To the Fund:

Northstar Advantage Trust
Two Pickwick Plaza
Greenwich, Connecticut 06830
Attention: Mr. Mark Lipson, President

To the Transfer Agent:

The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President

with a copy to the Transfer Agent's General Counsel

Article 23 SUCCESSORS

23.1 This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns, provided, however, that
this Agreement shall not be assigned to any person other than a person
controlling, controlled by or under common control with the assignor without the
written consent of the other party, which consent shall not be unreasonably
withheld.

Article 24 GOVERNING LAW

24.1 This Agreement shall be governed exclusively by the laws of the
Commonwealth of Massachusetts without reference to the choice of law provisions
thereof. Each party hereto hereby (i) consents to the personal jurisdiction of
the Commonwealth of Massachusetts courts over the

12
<PAGE>

parties hereto, hereby waiving any defense of lack of personal jurisdiction; and
(iii) appoints the person to whom notices hereunder are to be sent as agent for
service of process.

Article 25 COUNTERPARTS

25.1 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.

Article 26 CAPTIONS

26.1 The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.

Article 27 USE OF TRANSFER AGENT/FUND NAME

27.1 The Fund shall not use the name of the Transfer Agent in any
Prospectus, Statement of Additional Information, Shareholders' report, sales
literature or other material relating to the Fund in a manner not approved prior
thereto in writing; provided, that the Transfer Agent need only receive notice
of all reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by any government agency or
applicable law or rule.

27.2 The Transfer Agent shall not use the name of the Fund or material
relating to the Fund on any documents or forms for other than internal use in a
manner not approved prior thereto in writing; provided, that the Fund need only
receive notice of all reasonable uses of its name which merely refer in accurate
terms to the appointment of the Transfer Agent or which are required by any
government agency or applicable law or rule.

Article 28 RELATIONSHIP OF PARTIES

28.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.

Article 29 ENTIRE AGREEMENT; SEVERABILITY

29.1 This Agreement and the Schedules attached hereto constitute the
entire agreement of the parties hereto relating to the matters covered hereby
and supersede any previous agreements. If any provision is held to be illegal,
unenforceable or invalid for any reason, the remaining provisions shall not be
affected or impaired thereby.

13
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.

NORTHSTAR ADVANTAGE TRUST:

By:
---------------------------------------------

Title: VP/Sec.
------------------------------------------

THE SHAREHOLDER SERVICES GROUP, INC.:

By:
--------------------------------------------

Title: SENIOR VP
-----------------------------------------

14
<PAGE>

EXHIBIT 1

Northstar Advantage Income and Growth Fund (A, B, C)
Northstar Advantage Multi-Sector Bond Fund (A, B, C)
Northstar Advantage High Total Return Fund (A, B, C)

1
<PAGE>

SCHEDULE A

DUTIES OF THE TRANSFER AGENT

1. SHAREHOLDER INFORMATION. The Transfer Agent shall maintain a record
of the number of Shares held by each Shareholder of record which shall include
name, address, taxpayer identification and which shall indicate whether such
Shares are held in certificates or uncertificated form.

2. SHAREHOLDER SERVICES. The Transfer Agent shall respond as
appropriate to all inquiries and communications from Shareholders relating to
Shareholder accounts with respect to its duties hereunder and as may be from
time to time mutually agreed upon between the Transfer Agent and the Fund.

3. SHARE CERTIFICATES.

(a) At the expense of the Fund, the Fund shall supply the Transfer
Agent with an adequate supply of blank share certificates to meet the Transfer
Agent requirements therefor. Such Share certificates shall be properly signed
by facsimile. The Fund agrees that, notwithstanding the death, resignation, or
removal of any officer of the Fund whose signature appears on such certificates,
the Transfer Agent or its agent may continue to countersign certificates which
bear such signatures until otherwise directed by Written Instructions.

(b) The Transfer Agent shall issue replacement Share certificates in
lieu of certificates which have been lost, stolen or destroyed, upon receipt by
the Transfer Agent of properly executed affidavits and lost certificate bonds,
in form satisfactory to the Transfer Agent, with the Fund and the Transfer Agent
as obligees under the bond.

(c) The Transfer Agent shall also maintain a record of each
certificate issued, the number of Shares represented thereby and the Shareholder
of record. With respect to Shares held in open accounts or uncertificated form
(i.e., no certificate being issued with respect thereto) the Transfer Agent
shall maintain comparable records of the Shareholders thereof, including their
names, addresses and taxpayer identification. The Transfer Agent shall further
maintain a stop transfer record on lost and/or replaced certificates.

4. MAILING COMMUNICATIONS TO SHAREHOLDERS; PROXY MATERIALS. The Transfer
Agent will address and mail to Shareholders of the Fund, all reports to
Shareholders, dividend and distribution notices and proxy material for the
Fund's meetings of Shareholders. In connection with meetings of Shareholders,
the Transfer Agent will prepare Shareholder lists, mail and certify as to the
mailing of proxy materials, process and tabulate returned proxy cards, report on
proxies voted prior to meetings, act as inspector of election at meetings and
certify Shares voted at meetings.

2
<PAGE>

5. SALES OF SHARES

(a) The Transfer Agent shall not be required to issue any Shares of
the Fund where it has received a Written Instruction from the Fund or official
notice from any appropriate authority that the sale of the Shares of the Fund
has been suspended or discontinued. The existence of such Written Instructions
or such official notice shall be conclusive evidence of the right of the
Transfer Agent to rely on such Written Instructions or official notice.

(b) In the event that any check or other order for the payment of
money is returned unpaid for any reason, the Transfer Agent will endeavor to:
(i) give prompt notice of such return to the Fund or its designee; (ii) place a
stop transfer order against all Shares issued as a result of such check or
order; and (iii) take such actions as the Transfer Agent may from time to time
deem appropriate.

6. TRANSFER AND REPURCHASE

(a) The Transfer Agent shall process all requests to transfer or
redeem Shares in accordance with the transfer or repurchase procedures set forth
in the Fund's Prospectus.

(b) The Transfer Agent will transfer or repurchase Shares upon
receipt of Oral or Written Instructions or otherwise pursuant to the Prospectus
and Share certificates, if any, properly endorsed for transfer or redemption,
accompanied by such documents as the Transfer Agent reasonably may deem
necessary.

(c) The Transfer Agent reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the endorsement on the instructions
is valid and genuine. The Transfer Agent also reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the requested transfer
or repurchase is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or repurchases which the Transfer
Agent, in its good judgement, deems improper or unauthorized, or until it is
reasonably satisfied that there is no basis to any claims adverse to such
transfer or repurchase.

(d) When Shares are redeemed, the Transfer Agent shall, upon receipt
of the instructions and documents in proper form, deliver to the Custodian and
the Fund or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate accounts
maintained by the Transfer Agent reflecting outstanding Shares of the Fund and
Shares attributed to individual accounts.

(e) The Transfer Agent, upon receipt of the monies paid to it by the
Custodian for the repurchase of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures described in the written
instruction received by the Transfer Agent from the Fund.

(f) The Transfer Agent shall not process or effect any repurchase
with respect to

3
<PAGE>

Shares of the Fund after receipt by the Transfer Agent or its agent of
notification of the suspension of the determination of the net asset value of
the Fund.

7. DIVIDENDS

(a) Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund with respect to Shares of the
Fund, the Fund shall furnish or cause to be furnished to the Transfer Agent
Written Instructions setting forth the date of the declaration of such dividend
or distribution, the ex-dividend date, the date of payment thereof, the record
date as of which Shareholders entitled to payment shall be determined, the
amount payable per Share to the Shareholders of record as of that date, the
total amount payable to the Transfer Agent on the payment date and whether such
dividend or distribution is to be paid in Shares at net asset value.

(b) On or before the payment date specified in such resolution of the
Board of Directors, the Fund will pay to the Transfer Agent sufficient cash to
make payment to the Shareholders of record as of such payment date.

(c) If the Transfer Agent does not receive sufficient cash from the
Fund to make total dividend and/or distribution payments to all Shareholders of
the Fund as of the record date, the Transfer Agent will, upon notifying the
Fund, withhold payment to all Shareholders of record as of the record date until
sufficient cash is provided to the Transfer Agent.

8. In addition to and neither in lieu nor in contravention of the
services set forth above, the Transfer Agent shall: (i) perform all the
customary services of a transfer agent, registrar, dividend disbursing agent and
agent of the dividend reinvestment and cash purchase plan as described herein
consistent with those requirements in effect as at the date of this Agreement.
The detailed definition, frequency, limitations and associated costs (if any)
set out in the attached fee schedule, include but are not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, tabulating proxies, mailing Shareholder reports to current
Shareholders, withholding taxes on U.S. resident and non-resident alien accounts
where applicable, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.

4
<PAGE>

SCHEDULE B

FEE SCHEDULE

The fees set forth herein shall apply jointly to each of the mutual funds
sponsored, managed or advised by Northstar Investment Management Corporation
or its affiliates (collectively, the "Funds") that have appointed The
Shareholder Services Group, Inc. ("TSSG") as transfer agent.

I. Fees

CLASS A, B, C

With respect to Class A, B, and C Shares, the Funds shall jointly pay TSSG an
annualized fee as detailed below.

ASSET LEVEL NETWORK LEVEL III ASSETS NON-NETWORKED ASSETS
----------- ------------------------ --------------------
1st 500 million 12.5 b.p. 15.0 b.p.
Next 500 million 11.0 b.p. 13.5 b.p.
Next 500 million 9.5 b.p. 12.0 b.p.
Over 1.5 billion 8.0 b.p. 10.5 b.p.

TSSG's fees will be discounted to a rate of 12.0 b.p. on all assets until
12/3/95.

After 12/3/95, asset based breakpoints will be applied specifically to each
asset category (re: networked vs. non-networked).

TSSG's fees shall be billed by TSSG monthly in arrears on a prorated basis of
1/12 of the annualized fee based on average net assets for the month in each
category (i.e. networked vs. non-networked).

CLASS T

With respect to Class T Shares, the Funds shall jointly pay TSSG an annualized
fee as detailed below.

- -- Actual fees will be determined based on final approval of TSSG's Fees by
the Funds' board. The Funds will provide TSSG with the portion of the
minutes of the board meeting applicable to the fee discussion. However,
in no instance will fees fall below the current level of:

Strategic Income $8.00
Government Securities $8.00
High Yield Bond $8.00
Income Fund $6.75
Growth Fund $6.75
Special Fund $6.75

5
<PAGE>

- -- A separate Sub Transfer Agency agreement will be executed between TSSG
and Advest Transfer Services, Inc. TSSG will pay Advest Transfer Services,
Inc. $3.00 per internal account and $6.00 per external account, payable
annually for each position held by them.

- -- TSSG's fees shall be billed by TSSG monthly in arrears on a prorated basis
of 1/12 of the annualized fee based on number of open accounts per Fund.

II. RETIREMENT PLAN FEES

- -- The Funds shall also pay TSSG an annual per account charge for each
retirement account maintained by TSSG at a rate of $10.00 per account
number. Specifically, if a shareowner maintains a retirement account
with the same account number across multiple Funds, TSSG will be paid
$10.00.

III. START-UP COSTS

- -- TSSG will provide a reconciliation of the remaining start-up costs (total
cost $253,000) by December 11, 1995.

- -- Since Funds have moved their fund accounting business to TSSG, TSSG will
forgive $75,000 of the $253,000 conversion costs.

- -- The reconciliation will reflect actual revenues generated in year one
(12/4/94-12/3/95) as a result of two increases to the basis point agreement
as noted below:

1. 7.5 b.p. to 10 b.p. (Offset start-up costs)
2. 10 b.p. to 12 b.p. (Cover conversion payment)

- -- If the Funds (excluding Class T shares) collectively achieve an average
asset balance of $350 M for year one (12/4/94-12/3/95), TSSG will
forgive up to a maximum of 25% of the remaining start-up costs.

- -- If the Funds (excluding Class T shares) collectively achieve an average
asset balance of less than $350 M for year one (12/4/94-12/3/95),
TSSG will forgive a pro rata portion of the year one maximum
forgiveness.

- -- The Funds will have a one-time option, exercisable by December 15, 1995,
to split the remaining start-up costs evenly with TSSG. Payment
must be made in full by December 29, 1995.

- -- In the event the Funds elect not to exercise the one-time option, the
remaining start-up costs will be amortized equally over the next
three years. Reimbursement will be forgiven on each anniversary
date of conversion, if the Funds collectively achieve the following

6
<PAGE>

average asset balances for the prior year (excluding Class T asset
balances):

December 4, 1996 500m
December 4, 1997 750m
December 4, 1998 1,000m

The forgiveness in any year will not exceed 25% of the remaining start-up
costs. In any year that target asset levels are not achieved, a pro rata
portion of the maximum forgiveness will be applied.

An example of the reconciliation is attached as part of this Schedule B Fee
Schedule.

7
<PAGE>

RECONCILIATION EXAMPLE

NORTHSTAR START-UP COSTS

Conversion Cost $203,500
Conversion Payment 49,500
--------
TOTAL $253,000

Fund Accounting Credit ($75,000) Converted by 12/4/95

*2.5 BP (First Year) ($60,500) (Estimated Flat Assets)

*2.0 BP (First Year) ($48,400) (Estimated Flat Assets)
---------
$69,100 Remaining

* To be recalculated based on actual revenue/assets on 12/4/95.

ASSUMPTIONS EXAMPLE 1

- - Assume balance remaining of $60,000 as of 12/4/95.
- - Assume Average Assets in Year One exceed $350M.
- - TSSG would forgive 25% of start-up costs ($15,000) per original Agreement.
- - Leaving balance of $45,000, which Northstar could either:

1. Pay 1/2 ($22,500) prior to 12/29/95 as payment in full, or

2. Defer remainder of reimbursement based on future year asset targets.

EXAMPLE 1

Remaining Balance $60,000
Average Assets Year One >$350M
Forgiveness ($15,000)

Balance Due $45,000

One-time Split Option $22,500

Note: Actual reimbursement will be based on actual results from 12/4/94
through 12/3/95.

8
<PAGE>

ASSUMPTIONS EXAMPLE 2

- - Assume balance remaining of $60,000 as of 12/4/95.
- - Assume Average Assets in Year One do not exceed $350M target.
- - Assume average assets are $325M.
- - TSSG would forgive 92.8% of 1/4 of start-up costs.
- - Leaving balance of $46,080, which Northstar could either:

1. Pay 1/2 ($23,040) prior to 12/29/95 as payment in full, or

2. Pay difference between Year One maximum forgiveness and pro rata
forgiveness based on asset levels achieved. Then defer remainder
of reimbursement based on future year asset level targets.

EXAMPLE 1
---------

Remaining Balance $60,000
Average Assets Year One $325M (LESS THAN $350)
Year One Forgiveness ($13,920) (92.8% of $15,000)

Balance Due $46,080

One-time Split Option $23,040
or
Year One Payment $1,080 ($15,000 - 13,920)

Note: Actual reimbursement will be based on actual results from 12/4/94
through 12/3/95.

9
<PAGE>

SCHEDULE C

OUT-OF-POCKET EXPENSES

The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:

- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
- Third party audit reviews
- All conversion costs: including System start up costs
- All Systems enhancements after the conversion at the rate of
$95.00 per hour
- Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer Agent in performing its duties and responsibilities
under this Agreement.

The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing as agreed with the Transfer Agent. In addition, the
Fund will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Fund and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by
the Transfer Agent as part of its duties and obligations under the Agreement.

10
<PAGE>

SCHEDULE D

FUND DOCUMENTS

- Certified copy of the Articles of Incorporation of the Fund, as
amended

- Certified copy of the By-laws of the Fund, as amended,

- Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement

- Specimens of the certificates for Shares of the Fund, if applicable,
in the form approved by the Board of Directors of the Fund, with
a certificate of the Secretary of the Fund as to such approval

- All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the
Fund

- Certified list of Shareholders of the Fund with the name, address and
taxpayer identification number of each Shareholder, and the number of
Shares of the Fund held by each, certificate numbers and denominations
(if any certificates have been issued), lists of any accounts against
which stop transfer orders have been placed, together with the reasons
therefore, and the number of Shares redeemed by the Fund

- All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Fund or as required by law and shall perform such
other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or annual
meetings of shareholders and any other notices required thereby.

<PAGE>

ADMINISTRATION AGREEMENT

THIS ADMINISTRATION AGREEMENT is made as of April 3, 1995, by and between
THE SHAREHOLDER SERVICES GROUP, INC. a Massachusetts corporation ("TSSG"), and
the Trusts or Series of Trusts named in Annex 1 hereto, each a Massachusetts
business trust (the "Funds").

WHEREAS, each Fund is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

WHEREAS, each Fund desires to retain TSSG to render certain administrative
services to the Fund and TSSG is willing to render such services;

WITNESSETH:

NOW, THEREFORE, in consideration of the premises and mutual convenants
herein contained, it is agreed between the parties hereto as follows:

1. APPOINTMENT. The Funds hereby appoints TSSG to act as Administrator of
the Funds on the terms set forth in this Agreement. TSSG accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.

2. DELIVERY OF DOCUMENTS. The Funds have furnished or shall furnish to TSSG
upon request copies properly certified or authenticated of each of the
following:

(a) Resolutions of each Fund's Trustees authorizing the appointment of
TSSG to provide certain administrative services to the Fund and approving this
Agreement;

(b) Each Fund's Declaration of Trust filed with the Massachusetts
Secretary of State and all amendments thereto (the "Declaration");

(d) The Investment Advisory Agreement between Northstar Investment
Management Corp. (the "Adviser") and the Funds (the "Advisory Agreements");

(e) The Custody Agreements between the Custodian for each Fund (the
"Custodian") and each of the Funds (the "Custody Agreements");

(f) The Transfer Agency and Registrar Agreement between The Shareholder
Services Group, Inc. (the "Transfer Agent") and the Funds dated as of December
6, 1994, as amended;

<PAGE>

(g) Each Fund's Registration Statement on Form N1-A (the "Registration
Statement") under the Securities Act of 1933 and under the 1940 Act, and all
amendments thereto; and

(h) The Exemptive Order pursuant to which the Funds offer multiple classes
of shares and the accounting procedures utilized in connection with the multiple
class arrangement; and

(i) Each Fund's most recent prospectus (the "Prospectus").

Each Fund will furnish TSSG from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing. Furthermore, each Fund will provide TSSG with any other documents
that TSSG may reasonably request and will notify TSSG as soon as possible of any
matter materially affecting the performance of TSSG of its services under this
Agreement.

3. DUTIES AS ADMINISTRATOR. Subject to the supervision and direction of
the Trustees of each Fund, TSSG, as Administrator, will assist in supervising
various aspects of the Fund's administrative operations and undertakes to
perform the following specific services:

A. FUND ACCOUNTING

(a) Accounting and bookkeeping services for each class of shares of each
Fund (including the maintenance of such accounts, books and records of each Fund
as may be required by Section 3l(a) of the 1940 Act and the rules thereunder),
as more fully set forth in the description of TSSG's services contained in
Schedule A to this Agreement;

(b) Valuing each Fund's assets and calculating the net asset value of the
shares of the Fund at the close of trading on the New York Stock Exchange in
accordance with the Prospectus and the multiple class accounting procedures, as
more fully set forth in the description of TSSG's services contained in Schedule
A to this Agreement, or if standard valuation procedures cannot be executed,
TSSG shall give prompt notification thereof to the affected Fund and such
securities shall be valued in accordance with the internal procedures approved
by the Trustees of such Fund;

(c) Reconciling, on a daily basis, the accounting records of the Funds
against the records of the Funds maintained and provided by the Funds' Transfer
Agent, and reconciling, on a monthly basis, the accounting records of the Funds
against the records of the Funds maintained and provided by the Funds'
Custodian.

(d) Maintaining office facilities (which may be in the offices of TSSG or
a corporate affiliates) for purposes of providing the services described above,
and

(e) Furnishing statistical and research data, data processing services,
clerical services, and internal legal, executive and administrative services and
stationery and office supplies in connection with the services described above.

<PAGE>

B. BLUE SKY

(a) Effecting and maintaining (through the daily monitoring of sales of
shares of each Fund), as the case may be, the registration or qualification of
shares of the Fund for sale under the securities laws of all fifty states and
such other jurisdictions indicated for each Fund from time to time;

(b) Filing with each appropriate jurisdiction the appropriate materials
relating to each Fund, such filings to be made promptly after receiving such
materials from the Fund, including Post-Effective Amendments to the Fund's
Registration Statement; Annual and Semi-Annual Reports to Shareholders, Notices
pursuant to Rule 24f-2 under the 1940 Act; definitive copies of the Fund's
Prospectus and Statement of Additional Information and any Supplements thereto;
Amendments to the Declaration of Trust, By-Laws, or Distribution Agreement; and
Notices of Annual or Special Meetings of Shareholders and related Proxy
materials which propose the merger, reorganization or liquidation of a Fund;

(c) Conveying to each Fund any comments received on such filings and, if
desired by the Fund, responding to such comments in such manner as authorized by
the Fund; and

(d) In connection with the foregoing, providing the services of certain
persons who may be appointed as officers of the Fund by the Fund's Board of
Trustees.

(e) Remittance to the respective jurisdictions of registration fees for
the shares of any Fund, and of any fees for qualifying or continuing the
qualification of any Fund. TSSG may request the funds necessary for the payment
of fees in advance of the date when the fees become due, or may advance such
amounts on behalf of the Fund and invoice the Fund for such out-of-pocket
expenses.

C. OTHER SERVICES

In addition to the foregoing and at the request of each Fund for such additional
consideration as the parties shall agree, TSSG may also under render the
following services:

(a) Accumulating information for and, subject to approval by the Fund's
Treasurer, preparing reports to the Fund's shareholders of record and the SEC
including, but not necessarily limited to, Annual Reports and Semi-Annual
Reports on Form N-SAR;

(b) Preparing and furnishing the Fund with performance information
(including yield and total return information) calculated in accordance with
applicable U.S. securities laws and reporting to external databases such
information as may reasonably be requested.

In performing all services under this Agreement, TSSG shall act in
conformity with the Fund's Articles and By-Laws, the 1940 Act, and the
Investment Advisers Act of 1940, as the same may be amended from time to time;
and the investment objective, investment policies and

<PAGE>

other practices and policies set forth in the Fund's Registration Statement, as
such Registration Statement and practices and policies may be amended from time
to time.

4. ALLOCATION OF EXPENSES. TSSG shall bear all expenses in connection
with the performance of its services under this Agreement except as otherwise
specially provided herein.

(a) TSSG will from time to time employ or associate with itself such
person or persons as TSSG may believe to be particularly suited to assist it in
performing services under this Agreement. Such person or persons may be officers
and employees who are employed by both TSSG and one or more Funds. The
compensation of such person or persons shall be paid by TSSG and no obligation
shall be incurred on behalf of any Fund in such respect.

(b) TSSG shall not be required to pay any of the following expenses
incurred by the Fund: taxes and fees payable to Federal, state and other
governmental agencies; outside auditing expenses; outside legal expenses; or
other expenses not specified in this Section 4 which may be properly payable by
any Fund.

(c) For the services to be rendered, the facilities to be furnished and
the payments to be made by TSSG, as provided for in this Agreement, each Fund
will pay TSSG monthly the fees set forth in Schedule B to this Agreement. Upon
any termination of this Agreement before the end of any month, the fee for such
part of a month shall be prorated according to the proportion which such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
TSSG, the value of each Fund's net assets shall be computed at the times and in
the manner specified in each Fund's Registration Statement.

(d) TSSG will bill the Funds as soon as possible after the end of each
calendar month, and said billings will be detailed in accordance with the
out-of-pocket schedule. The Fund will promptly pay to TSSG the amount of such
billing.

5. LIMITATION OF LIABILITY. TSSG shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Funds in connection
with the performance of its obligations and duties under this Agreement, except
a loss resulting from TSSG's willful misfeasance, bad faith or gross negligence
in the performance of such obligations and duties, or by reason of its reckless
disregard thereof. The Funds will indemnify TSSG against and hold it harmless
from any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit not resulting from the willful misfeasance, bad faith or gross
negligence of TSSG in the performance of such obligations and duties or by
reason of its reckless disregard thereof.

6. TERMINATION OF AGREEMENT.

(a) This Agreement shall be effective on the date first written above and
shall continue for one (l) year (the "Initial Term"), unless earlier terminated
pursuant to the terms of this

<PAGE>

Agreement. Thereafter, this Agreement shall automatically be renewed for
successive one year term ("Renewal Term").

(b) Either party may terminate this Agreement at the end of the Initial
Term or at the end of any subsequent Renewal Term upon not less than ninety (90)
days or more than one hundred-eighty (180) days prior written notice to the
other party.

(c) In the event a termination notice is given by any Fund, all expenses
associated with movement of records and materials and conversion thereof will be
borne by the Fund.

(d) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If TSSG is the Non-Defaulting Party, its termination of
this Agreement shall not constitute a waiver of any other rights or remedies of
TSSG with respect to services performed prior to such termination of rights of
TSSG to be reimbursed for out-of-pocket expenses. In all cases, termination by
the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting
Party of any other rights it might have under this Agreement or otherwise
against the Defaulting Party.

7. AMENDMENT TO THIS AGREEMENT. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.

8. MISCELLANEOUS.

(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to any Fund or TSSG shall be sufficiently given
if addressed to the party and received by it at its office set forth below or at
such other place as it may from time to time designate in writing.

To the Funds:
c/o Northstar Administrators
Two Pickwick Plaza
Greenwich, Connecticut 06830

To TSSG:

The Shareholder Services Group, Inc.
Exchange Place - 025-004B
Boston, Massachusetts 02109
Attn: Patricia L. Bickimer, Esq.

<PAGE>

(b) This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable without the written consent of the other
party.

(d) This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original and which collectively shall be deemed
to constitute only one instrument.

(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.

9. CONFIDENTIALITY. All books, records, information and data pertaining
to the business of the Fund that are exchanged or received pursuant to the
performance of TSSG's duties under this Agreement shall remain confidential and
shall not be voluntarily disclosed to any other person, except as specifically
authorized by any Fund or as may be required by law.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date,
first written above.

THE SHAREHOLDER SERVICES GROUP. INC.

By:
--------------------------------------------
Name: Richard W. Ingram
Title: Vice President and Division Manager

NWNL NORTHSTAR SERIES TRUST

By:
--------------------------------------------
Name:
Title: Sr. Vice President

<PAGE>

NORTHSTAR ADVANTAGE FUNDS

NORTHSTAR ADVANTAGE HIGH YIELD FUND