<PAGE>
NORTHSTAR ADVANTAGE TRUST
ANNUAL REPORT,
OCTOBER 31, 1995
Dear Shareholders:
We are pleased to provide you with the annual report of the Northstar Advantage
Trust for the year ended October 31, 1995. We are gratified with your decision
to entrust your assets to the Northstar Advantage Funds and are confident that
we can assist you in reaching your financial objectives. Our goal is to provide
you with long term, consistent, and superior investment results through
fundamental research, analysis, and traditional investment disciplines.
Following this letter is a summary of the results of each Fund by their
respective portfolio manager. We hope you will find it informative.
In the first three quarters of 1995, many favorable changes occurred which
benefited the stock and bond markets. Investors began the year with substantial
fears of further large increases in interest rates driven by rising inflation
and an overheated economy. These fears were quickly proven to be incorrect.
Although the Federal Reserve Board did raise short term interest rates slightly
on February 1st, that proved to be the last in a series of Fed tightening moves.
Economic growth in the U.S. slowed to a moderate 2 1/2% rate, and long term
interest rates fell sharply from over 8% last winter to 6.3% currently.
The result of this "soft landing" or moderate growth/moderate inflation
strategy by the Fed produced a solid rise in bond prices of about 13% or more
and a sharp rise in the major stock market indices of over 23% for the twelve
months ended 10/31/95. Stock prices again were supported by excellent gains in
corporate profits even as economic growth slowed somewhat. The efficiency,
productivity, and world class competitiveness of so many U.S. companies is
finally being recognized by investors despite so many "experts" who had forecast
recession, high inflation and a decline in corporate profits.
Our outlook for both the bond and stock markets in 1996 remains favorable.
Government bond prices have improved strongly while other segments, especially
high yield bonds, continue to perform well. Stock markets have remained
favorable during the fall. In coming months we expect the President and Congress
to hammer out a long term budget which will reduce sharply the federal deficit.
We also expect the Fed to follow with another interest rate cut. Based on these
actions and continued low inflation, we believe that both stock and bond markets
should produce positive returns in 1996.
We note with great conviction that attempts to "time" the market often prove
counterproductive. Investors are strongly urged to focus on the long term.
Consistent disciplined investing is the proven method of achieving attractive
returns and meeting your financial objectives. We continue to support this
philosophy and look forward to serving your investment needs in the future.
Sincerely,
[SIG]
Mark Lipson
President
December 4, 1995
<PAGE>
NORTHSTAR ADVANTAGE
INCOME AND GROWTH FUND
[PHOTO][PHOTO][LOGO]
ERNEST MYSOGLAND GEOFFREY WADSWORTH
INVESTMENT ENVIRONMENT
THE MARKETS
- The U.S. economy continued to grow at a moderate 2 1/2% rate in 1995
with low inflation. This is the "soft landing" scenario which the
Federal Reserve aimed for in 1994 when it raised short term interest
rates to slow the economy and restrain inflation.
- Stock and bond prices in the U.S. responded very favorably to this
environment. After a slow start last winter due to the uncertainty of
rising interest rates, the major stock indices rose over 20% aided by
continued strong corporate earnings. Investment grade bonds gained
over 13% on average with the longest maturities doing even better.
THE FUND
- In the last six months, the Fund enjoyed a sharp rise of 9.5% paced
by the 54% invested in common stocks which rose over 13% versus 10%
to 13% for the Dow Jones Industrials and the S&P 500 respectively.
Our investment grade bonds rose over 7%.
- This brought the Fund's results for the twelve months ended 10/31/95
to a gain of 12.4% versus 17.4% for the Lipper Balanced Fund index.
Our underperformance reflects the negative impact from cyclical and
Mexican holdings early in the fiscal year. Fund results have been
very strong since last February (up 16.3%) especially considering our
typically conservative asset mix of approximately 60% stocks and 40%
bonds and the fund's well above average yield. Fund assets have risen
from $114 million a year ago to over $190 million.
- During the year we placed the majority of our bond position in U.S.
Treasury and Agency issues which have fully participated in the rise
of the bond market.
- Equity positions were well diversified. Our largest exposure has been
in financial stocks which have performed exceptionally well.
Following the sharp rise in technology stocks in the summer, we took
substantial profits in several holdings. The equity holdings share
the common themes of very strong cash flow, sharply rising dividends
and large stock repurchases.
CURRENT STRATEGY
- We expect further stock market gains in 1996 aided by Fed actions to
cut short term rates. We continue to find selected high quality
stocks selling at very reasonable prices. Most managements are
already on record for forecasting improved earnings in 1996.
- While we expect the current slow pace of economic growth to result in
modest 1996 earnings growth, we again note that fears of recession or
declining earnings seem ill founded.
- We plan to maintain our classic 60%/40% stock-bond mix. Current
holdings are much less cyclical than a year ago. Emphasis is on
financials, health care, consumer staples, energy and selected
technology stocks. Bond holdings will remain mainly in governments.
---------------------------------------------------------------------------
FUND INFORMATION (ALL DATA AS OF 10/31/95) NET ASSETS $190,038,626
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 10 EQUITY HOLDINGS
<C><S> <C>
COMPANY % FUND
1. Philip Morris 3.3 %
2. Intel 3.0
3. Xerox 2.4
4. Fed. Nat. Mortgage 2.3
5. Mellon Bank 2.2
6. Citicorp 2.0
7. WorldCom 2.0
8. Motorola 1.8
9. Computer Assoc. 1.7
10. Merck 1.7
----
22.4 %
</TABLE>
<TABLE>
<CAPTION>
TOP 5 BOND HOLDINGS
<C><S> <C>
BOND % FUND
1. U.S. Treasury 7.625% due 2025 8.7 %
2. U.S. Treasury 7.875% due 2001 4.0
3. GNMA 8.50% due 2025 3.1
4. U.S. Treasury 7.875% due 2004 2.4
5. U.S. Treasury 7.25% due 2004 2.3
----
20.5 %
</TABLE>
<TABLE>
<CAPTION>
TOP 5 SECTORS
<C><S> <C>
% FUND
1. Banking, Insurance, Financial Services 14.7 %
2. Technology 9.7
3. Energy 7.8
4. Health Care 6.2
5. Cons. Staples/Tobacco 5.2
----
43.6 %
</TABLE>
1
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE NORTHSTAR
ADVANTAGE INCOME AND GROWTH FUND AND COMPARATIVE INDICES FROM INCEPTION
OF EACH CLASS OF SHARES THROUGH THE FUND'S FISCAL YEAR END.
In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data is supplied for the fiscal year ended October 31,
1995, with all distributions reinvested in shares. The average annualized total
return for Class A shares of 4.68% for the period since the Fund's inception on
November 8, 1993 reflects payment of the maximum sales charge of 4.75%.
Cumulative total returns of 1.57% and 5.79% since inception for Class B and
Class C shares on February 9, 1994 and March 21, 1994, respectively, reflect
applicable contingent deferred sales charges (maximum contingent deferred sales
charge for Class B shares of 5.00% declines to 0% after five years; and maximum
charge for Class C shares is 1.00% during the first year of investment only).
All performance data shown represents past performance, and should not be
considered indicative of future performance.
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND -- CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Lehman Brothers Gov't/Corp. Lipper Balanced Fund
Bond S&P 500 Class A Index
11/08/93 $10,000 $10,000 $10,000 $9,525
11/30/93 $10,030 $9,871 $9,842 $9,667
12/31/93 $10,074 $10,037 $10,021 $9,805
01/31/94 $10,225 $10,363 $10,284 $10,225
02/28/94 $10,002 $10,051 $10,073 $9,938
03/31/94 $9,757 $9,659 $9,698 $9,536
04/30/94 $9,676 $9,771 $9,725 $9,488
05/31/94 $9,659 $9,892 $9,794 $9,536
06/30/94 $9,637 $9,701 $9,619 $9,432
07/31/94 $9,829 $10,008 $9,842 $9,645
08/31/94 $9,833 $10,382 $10,084 $9,936
09/30/94 $9,685 $10,175 $9,893 $9,819
10/31/94 $9,674 $10,387 $9,928 $9,751
11/30/94 $9,657 $9,977 $9,690 $9,448
12/31/94 $9,721 $10,173 $9,771 $9,455
01/31/95 $9,907 $10,420 $9,891 $9,416
02/28/95 $10,137 $10,796 $10,178 $9,643
03/31/95 $10,205 $11,160 $10,356 $9,808
04/30/95 $10,347 $11,472 $10,546 $9,997
05/31/95 $10,780 $11,889 $10,887 $10,364
06/30/95 $10,867 $12,222 $11,083 $10,527
07/31/95 $10,824 $12,610 $11,318 $10,758
08/31/95 $10,963 $12,606 $11,406 $10,888
09/30/95 $11,075 $13,190 $11,680 $11,039
10/31/95 $11,237 $13,125 $11,652 $10,948
Average Annual Total
Return
1-Year 6.93%
Since Inception 4.68%
</TABLE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND -- CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Lehman Brothers Gov't/Corp. Lipper Balanced Fund
Bond S&P 500 Class B Index
02/09/94 $10,000 $10,000 $10,000 $10,000
02/28/94 $9,921 $9,700 $9,784 $9,795
03/31/94 $9,678 $9,321 $9,388 $9,430
04/30/94 $9,598 $9,429 $9,340 $9,456
05/31/94 $9,580 $9,545 $9,388 $9,523
06/30/94 $9,558 $9,361 $9,278 $9,353
07/31/94 $9,749 $9,656 $9,488 $9,570
08/31/94 $9,753 $10,019 $9,773 $9,805
09/30/94 $9,606 $9,818 $9,647 $9,620
10/31/94 $9,596 $10,023 $9,580 $9,654
11/30/94 $9,578 $9,627 $9,283 $9,423
12/31/94 $9,641 $9,817 $9,275 $9,501
01/31/95 $9,827 $10,055 $9,236 $9,618
02/28/95 $10,055 $10,418 $9,439 $9,897
03/31/95 $10,122 $10,770 $9,598 $10,070
04/30/95 $10,263 $11,071 $9,782 $10,255
05/31/95 $10,693 $11,473 $10,132 $10,587
06/30/95 $10,778 $11,794 $10,289 $10,777
07/31/95 $10,736 $12,169 $10,505 $11,005
08/31/95 $10,874 $12,185 $10,603 $11,091
09/30/95 $10,984 $12,729 $10,771 $11,357
10/31/95 $11,146 $12,665 $10,673 $11,330
Average Annual Total
Return
1-Year 6.41%
Since Inception 1.57%
</TABLE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND -- CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Lehman Brothers Gov't/Corp. Lipper Balanced Fund
Bond S&P 500 Class C Index
03/21/94 $10,000 $10,000 $10,000 $10,000
03/31/94 $9,893 $10,070 $9,632 $10,000
04/30/94 $9,811 $10,187 $9,584 $10,027
05/31/94 $9,793 $10,313 $9,632 $10,099
06/30/94 $9,771 $10,114 $9,517 $9,918
07/31/94 $9,966 $10,432 $9,732 $10,148
08/31/94 $9,970 $10,824 $10,025 $10,398
09/30/94 $9,820 $10,608 $9,894 $10,201
10/31/94 $9,809 $10,829 $9,825 $10,237
11/30/94 $9,791 $10,401 $9,520 $9,992
12/31/94 $9,856 $10,606 $9,510 $10,075
01/31/95 $10,045 $10,863 $9,471 $10,199
02/28/95 $10,278 $11,255 $9,679 $10,495
03/31/95 $10,347 $11,635 $9,838 $10,678
04/30/95 $10,491 $11,961 $10,027 $10,875
05/31/95 $10,930 $12,395 $10,387 $11,226
06/30/95 $11,018 $12,743 $10,554 $11,428
07/31/95 $10,975 $13,147 $10,775 $11,670
08/31/95 $11,115 $13,143 $10,875 $11,761
09/30/95 $11,229 $13,752 $11,039 $12,044
10/31/95 $11,394 $13,684 $10,948 $12,015
Average Annual Total
Return
1-Year 10.43%
Since Inception 5.79%
</TABLE>
2
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Industry $ Value % of Net Assets
<S> <C> <C> <C>
Aerospace & Defense $ 1,443,750 .......... 0.76%
Automotive 1,903,000 .......... 1.00
Banking 13,080,813 .......... 6.88
Computer Services 1,876,000 .......... 0.99
Consumer Staples 3,490,196 .......... 1.84
Containers 1,115,000 .......... 0.59
Electrical Equipment 4,418,875 .......... 2.32
Energy 14,848,746 .......... 7.82
Entertainment/Broadcasting 5,367,535 .......... 2.82
Financial Services 12,079,183 .......... 6.35
Gaming 2,452,650 .......... 1.29
Insurance 2,689,506 .......... 1.41
Lodging & Restaurants 1,253,750 .......... 0.66
Machinery 1,151,625 .......... 0.60
Metal 1,892,001 .......... 1.00
Office Equipment 4,489,350 .......... 2.36
Paper & Forest Products 2,704,500 .......... 1.42
Pharmaceutical/Healthcare 11,743,921 .......... 6.18
Real Estate Investment Trust 8,134,975 .......... 4.29
Retail 5,846,750 .......... 3.08
Technology 18,369,875 .......... 9.67
Telecommunications 3,729,038 .......... 1.96
Tobacco 6,337,500 .......... 3.34
Transportation 3,230,675 .......... 1.70
U.S. Government & Agencies 41,955,985 .......... 22.08
Repurchase Agreements 13,404,226 .......... 7.05
Other assets less liabilities 1,029,201 .......... 0.54
------------ -------
Net Assets $190,038,626 .......... 100.00%
------------ -------
------------ -------
</TABLE>
3
<PAGE>
NORTHSTAR ADVANTAGE
HIGH TOTAL RETURN FUND
[PHOTO][LOGO]
THOMAS OLE DIAL
INVESTMENT ENVIRONMENT
THE MARKETS
- It is widely agreed that the Federal Reserve's interest rate policies
helped the U.S. economy achieve a soft landing in 1995. Lower actual
inflation rates and expectations of continued declines in the CPI
helped push treasury bond prices up to the levels reached in early
1994. The yield on the long bond fell from 8% to 6.3%. Solid growth
in the U.S. economy and in corporate profits sent stock prices to
record levels throughout 1995.
- High yield bond prices marched up along with those of treasury bonds,
and were further boosted by higher stock valuations. However, spreads
of high yield bonds over treasury yields and spreads of B-rated
bonds' yields over BB-rated bonds widened as slower economic growth
in 1995 increased fears of a recession in 1996.
THE FUND
- From 11/01/94 to 10/31/95, the total return of the Fund's Class A
shares was 13.02%; the Lipper average was 12.73%. From January
through October in 1995, the Fund ranked 23rd out of 119 funds and
had a total return of 16.46% (based on Class A shares). That
improvement in the Fund's performance promoted sales that led to a
148% increase in its net assets which rose from $78.8MM to $195.9MM
in the last fiscal year.
- The Fund's performance was enhanced by changes in portfolio
allocations that anticipated changes in the markets. We underweighted
investments in the retail, gaming and cyclical industries (e.g.,
steel, transportation) to limit or avoid negative impacts on the
Fund's total return. On the other hand, we earned high returns on our
new investments in the telecommunications, cable and broadcasting
industries and in emerging markets.
- Bonds that were issued with equity securities or rights attached
("equity kickers") contributed significantly to the Fund's high
returns (e.g., Echostar, Thermoscan, Heartland Wireless and SHL
Systemhouse)
CURRENT STRATEGY
- Continue above-average exposure in non-cyclical industries and in
bonds that have equity kickers.
- Invest in companies that will benefit from deregulation, and very
cautiously invest in emerging markets and cyclicals with due regard
for the volatility in those market segments.
---------------------------------------------------------------------------
FUND INFORMATION (ALL DATA AS OF 10/31/95) NET ASSETS $195,923,958
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY TOP 10 HOLDINGS % FUND BOND TOP 5 INDUSTRIES % FUND RATING CREDIT QUALITY % FUND
<S> <C> <C> <C> <C> <C>
1. Echostar Communications 3.0% 1. Telecommunications 13.2% AAA-A 0.0%
2. Americo Life 2.9 2. Broadcasting 9.0 BBB 0.0
3. Heartland Wireless 2.6 3. Cable 8.4 BB 20.8
4. California Energy 2.3 4. Utilities 8.0 B 48.6
5. Pegasus Media 2.3 5. Paper 5.5 CCC 7.4
6. CAI Wireless 2.2 44.1% Not Rated 16.4
7. IXC Communications 2.1 - Internal BB 5.8
8. WinStar Communications 2.1 - Internal B 8.6
9. BCP/Essex Holdings 2.0 - Internal CCC/D 2.0
10. Duane Reade 2.0 Cash/Other Assets 6.8
------- ----
23.5% 100.0%
(Average Quality = B+)
</TABLE>
4
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
[LOGO]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE NORTHSTAR
ADVANTAGE HIGH
TOTAL RETURN FUND AND COMPARATIVE INDICES FROM INCEPTION OF EACH CLASS
OF SHARES THROUGH THE FUND'S FISCAL YEAR END.
In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data is supplied for the fiscal year ended October 31,
1995, with all distributions reinvested in shares. The average annualized total
return for Class A shares of 2.14% for the period since the Fund's inception on
November 8, 1993 reflects payment of the maximum sales charge of 4.75%.
Cumulative total returns of (1.05)% and 2.38% since inception for Class B and
Class C shares on February 9, 1994 and March 21, 1994, respectively, reflect
applicable contingent deferred sales charges (maximum contingent deferred sales
charge for Class B shares of 5.00% declines to 0% after five years; and maximum
charge for Class C shares is 1.00% during the first year of investment only).
All performance data shown represents past performance, and should not be
considered indicative of future performance.
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND -- CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
(IN THOUSANDS)
Lehman Brothers Gov't/Corp. Lehman Brothers High
Bond Class A Yield
11/08/93 $10,000 $9,525 $10,000
11/30/93 $10,030 $9,605 $10,048
12/31/93 $10,074 $9,792 $10,173
01/31/94 $10,225 $10,077 $10,393
02/28/94 $10,002 $10,054 $10,366
03/31/94 $9,757 $9,716 $9,974
04/30/94 $9,676 $9,577 $9,907
05/31/94 $9,659 $9,475 $9,912
06/30/94 $9,637 $9,511 $9,942
07/31/94 $9,829 $9,390 $10,027
08/31/94 $9,833 $9,308 $10,098
09/30/94 $9,685 $9,247 $10,099
10/31/94 $9,674 $9,226 $10,123
11/30/94 $9,657 $9,038 $9,996
12/31/94 $9,721 $8,953 $10,070
01/31/95 $9,907 $9,059 $10,207
02/28/95 $10,137 $9,403 $10,557
03/31/95 $10,205 $9,558 $10,671
04/30/95 $10,347 $9,818 $10,942
05/31/95 $10,780 $9,950 $11,248
06/30/95 $10,867 $9,906 $11,320
07/31/95 $10,824 $10,221 $11,463
08/31/95 $10,963 $10,267 $11,498
09/30/95 $11,075 $10,381 $11,640
10/31/95 $11,237 $10,427 $11,712
Average Annual Total
Return
1-Year 7.66%
Since Inception 2.14%
</TABLE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND -- CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
(IN THOUSANDS)
Lehman Brothers Gov't/Corp. Lehman Brothers High
Bond Class B Yield
02/09/94 $10,000 $10,000 $10,000
02/28/94 $9,921 $9,937 $9,974
03/31/94 $9,678 $9,598 $9,597
04/30/94 $9,598 $9,455 $9,532
05/31/94 $9,580 $9,348 $9,536
06/30/94 $9,558 $9,379 $9,566
07/31/94 $9,749 $9,254 $9,647
08/31/94 $9,753 $9,169 $9,716
09/30/94 $9,606 $9,102 $9,717
10/31/94 $9,596 $9,076 $9,740
11/30/94 $9,578 $8,885 $9,617
12/31/94 $9,641 $8,796 $9,689
01/31/95 $9,827 $8,895 $9,820
02/28/95 $10,055 $9,206 $10,157
03/31/95 $10,122 $9,350 $10,267
04/30/95 $10,263 $9,601 $10,528
05/31/95 $10,693 $9,748 $10,822
06/30/95 $10,778 $9,699 $10,892
07/31/95 $10,736 $9,980 $11,029
08/31/95 $10,874 $10,018 $11,063
09/30/95 $10,984 $10,147 $11,199
10/31/95 $11,146 $10,163 $11,269
Average Annual Total
Return
1-Year 6.97%
Since Inception (1.05)%
</TABLE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND -- CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
(IN THOUSANDS)
Lehman Brothers Gov't/Corp. Lehman Brothers High
Bond Class C YIeld
3/21/94 $10,000 $10,000 $10,000
3/31/94 $9,893 $9,769 $9,622
4/30/94 $9,811 $9,623 $9,557
5/31/94 $9,793 $9,514 $9,561
6/30/94 $9,771 $9,545 $9,591
7/31/94 $9,966 $9,418 $9,673
8/31/94 $9,970 $9,331 $9,741
9/30/94 $9,820 $9,264 $9,742
10/31/94 $9,809 $9,237 $9,766
11/30/94 $9,791 $9,043 $9,642
12/31/94 $9,856 $8,952 $9,714
1/31/95 $10,045 $9,052 $9,846
2/28/95 $10,278 $9,412 $10,184
3/31/95 $10,347 $9,558 $10,294
4/30/95 $10,491 $9,815 $10,555
5/31/95 $10,930 $9,964 $10,851
6/30/95 $11,018 $9,915 $10,920
7/31/95 $10,975 $10,200 $11,058
8/31/95 $11,115 $10,239 $11,092
9/30/95 $11,229 $10,370 $11,228
10/31/95 $11,394 $10,386 $11,298
Average Annual Total
Return
1-Year 11.44%
Since Inception 2.38%
</TABLE>
5
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Security Shares Value
- ------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 54.28%
AEROSPACE & DEFENSE - 0.76%
Boeing Co. 22,000 $ 1,443,750
------------
AUTOMOTIVE - 1.00%
Magna International, Inc. 44,000 1,903,000
------------
BANKING - 6.88%
Ahmanson, (H. F.) & Co. 86,000 2,150,000
BankAmerica Corp. 52,000 2,990,000
Citicorp 57,500 3,730,313
Mellon Bank Corp. 84,000 4,210,500
------------
13,080,813
------------
CONSUMER STAPLES - 1.07%
Procter & Gamble Co. 25,000 2,025,000
------------
ELECTRICAL EQUIPMENT - 2.32%
AMP, Inc. 79,000 3,100,750
Emerson Electric Co. 18,500 1,318,125
------------
4,418,875
------------
ENERGY - 6.97%
Amoco Corp. 36,190 2,311,636
El Paso Natural Gas Co. 96,000 2,592,000
Halliburton Co. 31,000 1,286,500
Mobil Corp. (1) 23,700 2,387,775
Schlumberger LTD 20,000 1,245,000
Sonat, Inc. (1) 52,000 1,495,000
Texaco, Inc. 28,200 1,921,125
------------
13,239,036
------------
ENTERTAINMENT/BROADCASTING - 0.66%
British Sky Broadcasting Group PLC (2) 35,000 1,251,250
------------
FINANCIAL SERVICES - 4.57%
H&R Block, Inc. 43,000 1,773,750
Federal National Mortgage Association 41,000 4,299,875
MGIC Investment Corp. 46,000 2,616,250
------------
8,689,875
------------
LODGING & RESTAURANTS - 0.66%
Marriott International, Inc. 34,000 1,253,750
------------
MACHINERY - 0.60%
Kennametal, Inc. 37,000 1,151,625
------------
OFFICE EQUIPMENT - 2.36%
Xerox Corp. (1) 34,600 4,489,350
------------
PAPER & FOREST PRODUCTS - 1.42%
Georgia-Pacific Corp. (1) 16,000 1,320,000
Scott Paper Co. 26,000 1,384,500
------------
2,704,500
------------
</TABLE>
6
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
Security Shares Value
- ------------------------------------------------------------------------------
<S> <C> <C>
PHARMACEUTICAL/HEALTHCARE - 5.08%
Bristol-Myers Squibb Co. 41,000 $ 3,126,250
Guidant Corp. 10 320
Lilly, (Eli) & Co. 12,613 1,218,731
Merck & Co., Inc. 55,000 3,162,500
Mylan Laboratories, Inc. 112,500 2,137,500
------------
9,645,301
------------
REAL ESTATE INVESTMENT TRUSTS - 3.15%
DeBartolo Realty Corp. 50,000 650,000
General Growth Properties, Inc. 70,000 1,408,750
Highwoods Properties, Inc. 52,000 1,384,500
OMEGA Healthcare Investors, Inc. 79,000 2,004,625
Security Capital Pacific Trust 30,000 536,250
------------
5,984,125
------------
RETAIL - 1.99%
Home Depot, Inc. 78,000 2,905,500
Pep Boys-Manny, Moe & Jack 40,000 875,000
------------
3,780,500
------------
TECHNOLOGY - 8.75%
Computer Associates International, Inc. 59,250 3,258,750
DSC Communications Corp. (3) 78,500 2,904,500
Intel Corp. 82,000 5,729,750
National Semiconductor Corp. (3) 55,000 1,340,625
Motorola, Inc. 51,600 3,386,250
------------
16,619,875
------------
TELECOMMUNICATIONS - 1.96%
WorldCom, Inc. 114,300 3,729,038
------------
TOBACCO - 3.34%
Philip Morris Companies, Inc. (1) 75,000 6,337,500
------------
TRANSPORTATION - 0.74%
Conrail, Inc. 20,500 1,409,375
------------
TOTAL COMMON STOCKS
(cost $92,322,819) 103,156,538
------------
CONVERTIBLE PREFERRED STOCKS - 3.20%
COMPUTER SERVICES - 0.99%
General Motors Corp.
$3.25, Class E 28,000 1,876,000
------------
INSURANCE - 0.66%
Allstate Corp.
6.76%, Exchangeable Notes, 4/15/98 (4) 29,000 1,261,500
------------
REAL ESTATE - 0.63%
Security Capital Pacific Trust
$1.75, Series A 50,000 1,187,500
------------
</TABLE>
7
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Security
Shares/Principal Amount Value
- ------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY - 0.92%
National Semiconductor Corp.
$3.25 20,000 $ 1,750,000
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $5,186,481) 6,075,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
CONVERTIBLE BONDS - 5.99%
ENTERTAINMENT - 1.01%
Time Warner, Inc.
8.75%, Sr. Notes, 1/10/15 $ 1,841,400 1,926,565
------------
FINANCIAL - 0.98%
American Travellers Corp.
6.50%, Subordinated Notes, 10/01/05 970,000 1,122,988
Old Republic International Corp.
5.75%, Subordinated Debentures, 8/15/02 650,000 737,445
------------
1,860,433
------------
GAMING - 1.29%
Argosy Gaming Co.
12.00%, Subordinated Notes, 6/01/01 2,490,000 2,452,650
------------
METAL - 1.00%
Inco LTD
5.75%, Debentures, 7/01/04 1,425,000 1,892,001
------------
REAL ESTATE INVESTMENT TRUST - 0.51%
Meditrust
7.50%, Debentures, 3/01/01 940,000 963,350
------------
RETAIL - 0.24%
Staples, Inc.
4.50%, Notes, 10/01/00 450,000 461,250
------------
TRANSPORTATION - 0.96%
Alaska Air Group, Inc.
6.50%, Debentures, 6/15/05 1,950,000 1,821,300
------------
TOTAL CONVERTIBLE BONDS
(cost $11,405,642) 11,377,549
------------
CORPORATE BONDS & NOTES - 6.86%
CONSUMER STAPLES - 0.77%
RJR Nabisco, Inc.
8.625%, Notes, 12/01/02 1,450,000 1,465,196
------------
CONTAINERS - 0.59%
Owens-Illinois, Inc.
11.00%, Debentures, 12/01/03 1,000,000 1,115,000
------------
ENERGY - 0.85%
Occidental Petroleum Corp.
8.50%, Notes, 9/15/04 1,500,000 1,609,710
------------
ENTERTAINMENT/BROADCASTING - 1.15%
News America Holdings, Inc.
8.625%, Sr. Notes, 2/01/03 2,000,000 2,189,720
------------
FINANCIAL - 0.80%
Electronic TransMaster Trust
9.35%, Sr. Notes, 5/03/99 1,500,000 1,528,875
------------
</TABLE>
8
<PAGE>
NORTHSTAR ADVANTAGE INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
Security
Principal Amount Value
- ------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE - 1.10%
Columbia/HCA Healthcare
7.69%, Notes, 6/15/25 $ 2,000,000 $ 2,098,620
------------
INSURANCE - 0.75%
Leucadia National Corp.
8.25%, Sr. Subordinated Notes, 6/15/05 1,375,000 1,428,006
------------
RETAIL - 0.85%
Federated Department Stores, Inc.
10.00%, Sr. Notes, 2/15/01 1,500,000 1,605,000
------------
TOTAL CORPORATE BONDS & NOTES
(cost $12,412,040) 13,040,127
------------
U.S. GOVERNMENT & AGENCIES - 22.08%
Government National Mortgage Association
8.00%, 1/15/23 2,913,706 3,006,536
8.50%, 4/15/25 5,708,012 5,941,583
U.S. Treasury Notes and Bonds
7.25%, 5/15/04 4,000,000 4,327,240
7.625%, 2/15/25 14,200,000 16,488,756
7.875%, 8/15/01 7,000,000 7,684,390
7.875%, 11/15/04 4,000,000 4,507,480
------------
TOTAL U.S. GOVERNMENT & AGENCIES
(cost $39,730,290) 41,955,985
------------
TOTAL INVESTMENT SECURITIES - 92.41%
(Cost $161,057,272) 175,605,199
------------
REPURCHASE AGREEMENTS - 7.05%
Agreement with Bear Stearns bearing interest at
5.80% dated 10/31/95, to be repurchased 11/01/95
in the amount of $13,406,386 and collateralized
by $11,210,000 U.S. Treasury Bills due 3/07/96,
$821,000 U.S. Treasury Bills due 5/02/96,
$1,030,000 U.S. Treasury Bills due 5/30/96 and
$740,000 U.S. Treasury Bond due 2/15/21(cost
$13,404,226) 13,404,226 13,404,226
Other assets less liabilities - 0.54% 1,029,201
------------
Net Assets - 100.00% $190,038,626
------------
------------
</TABLE>
(1) Includes rights to purchase additional stock on the occurence of
certain events specified in the offering.
(2) American Depository Receipts.
(3) Non-income producing.
(4) Mandatory conversion at maturity into shares of PMI Group common stock.
9
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Security
Principal Amount/Units Value
<S> <C> <C>
DOMESTIC CORPORATE BONDS &
NOTES - 69.97%
AUTOMOTIVE - 0.50%
Walbro Corp.
9.875%, Sr. Notes, 7/15/05 $ 1,000,000 $ 985,000
------------
BANKING - 1.27%
Berkeley Federal Bank and
Trust
12.00%, Subordinated
Debentures, 6/15/05 2,425,000 2,467,437
------------
BROADCASTING - 8.10%
Chancellor Broadcasting Co.
12.50%, Sr. Subordinated
Notes, 10/01/04 2,425,000 2,558,375
Commodore Media, Inc.
7.50/13.25%, Sr. Subordinated
Notes, 5/01/03 (1) 2,250,000 2,041,875
Paxson Communications Corp.
11.625%, Sr. Subordinated
Notes, 10/01/02 (2) 3,900,000 3,851,250
Pegasus Media &
Communications, Inc.
12.50%, Units, 7/01/05 (2)(3) 4,400 4,455,000
Spanish Broadcasting Systems,
Inc.
7.50/12.50%, Sr. Notes,
6/15/02 (1) 3,000,000 2,955,000
------------
15,861,500
------------
BUILDING/SUPPLIES - 0.80%
Waxman Industries, Inc.
0/12.75%, Sr. Notes, 6/01/04
(1) 3,712,000 1,559,040
------------
CABLE - 7.83%
American Telecasting, Inc.
0/14.50%, Units, 8/15/05
(1)(2)(4) 5,000 2,825,000
CAI Wireless Systems, Inc.
12.25%, Sr. Notes, 9/15/02 4,000,000 4,240,000
Echostar Communications Corp.
0/12.875%, Units, 6/01/04
(1)(5) 8,900 5,785,000
Wireless One, Inc.
13.00%, Units, 10/15/03 (7) 2,400 2,493,000
------------
15,343,000
------------
CHEMICALS - 1.95%
Pioneer Americas Acquisition
Corp.
13.375%, Sr. Notes, 4/01/05
(2) 3,700,000 3,829,500
------------
CONGLOMERATE - 1.53%
LaRoche Industries, Inc.
13.00%, Sr. Subordinated
Notes, 8/15/04 2,000,000 2,135,000
Terex Corp.
13.75%, Units, 5/15/02 (2)(8) 1,000 857,500
------------
2,992,500
------------
CONSUMER PRODUCTS - 2.42%
International Semi-Tech Corp.
0/11.50%, Sr. Secured Notes,
8/15/03 (1) 3,900,000 2,008,500
</TABLE>
10
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
Security
Principal Amount/Units Value
<S> <C> <C>
Thermoscan, Inc.
13.5625%, Units, 8/15/01
(2)(9)(10) 2,200 $ 2,730,200
------------
4,738,700
------------
ENTERTAINMENT - 0.21%
Sam Houston Race Park
11.75%, Notes, 7/15/99
(11)(12) $ 1,500,000 405,000
------------
FINANCE - 4.78%
Americo Life, Inc.
9.25%, Sr. Subordinated
Notes, 6/01/05 6,000,000 5,670,000
GPA Delaware, Inc.
9.50%, Medium Term Notes,
12/15/01 (2) 250,000 203,750
GPA Holland
9.75%, Sr. Medium Term Notes,
12/10/01 (2) 2,000,000 1,650,000
GPA Holland
10.20%, Sr. Medium Term
Notes, 8/05/98 (2) 2,000,000 1,842,500
------------
9,366,250
------------
FOOD/BEVERAGE - 0.40%
Beatrice Foods, Inc.
12.00%, Sr. Subordinated
Notes, 12/01/01 2,250,000 787,500
------------
FOOD SERVICE - 1.86%
American Restaurant Group,
Inc.
12.00%, Sr. Notes, 9/15/98 4,900,000 3,650,500
------------
FOOD WHOLESALER - 1.28%
Di Giorgio Corp.
12.00%, Sr. Notes, 2/15/03 3,225,000 2,515,500
------------
GROCERY - 4.34%
Dairy Mart Convenience
Stores, Inc.
10.25%, Sr. Subordinated
Notes, 3/15/04 2,600,000 2,223,000
Farm Fresh, Inc.
12.25%, Sr. Notes, 10/01/00 4,000,000 3,380,000
Ralphs Grocery Co.
11.00%, Sr. Subordinated
Notes, 6/15/05 3,000,000 2,902,500
------------
8,505,500
------------
HOTELS & GAMING - 2.59%
GB Property Funding
10.875%, 1st Mortgage Notes,
1/15/04 2,950,000 2,470,625
Trump Castle Funding
11.75%, 1st Mortgage Notes,
11/15/03 1,000,000 810,000
Trump Plaza Funding
10.875%, Mortgage Notes,
6/15/01 1,900,000 1,790,750
------------
5,071,375
------------
METAL & METAL PRODUCTS -
1.82%
GS Technologies Operating Co.
12.25%, Sr. Notes, 10/01/05 2,000,000 2,025,000
</TABLE>
11
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Security
Principal Amount/Units Value
<S> <C> <C>
Renco Metals, Inc.
12.00%, Sr. Notes, 7/15/00 $ 1,425,000 $ 1,546,125
------------
3,571,125
------------
PRINTING/PUBLISHING - 1.46%
Affiliated Newspapers
Investments, Inc.
0/13.25%, Sr. Discount Notes,
7/01/06 (1)(13) 4,900,000 2,866,500
------------
REAL ESTATE - 1.50%
Trizec Corp. LTD
10.875%, Sr. Notes, 10/15/05 2,900,000 2,939,875
------------
RETAIL - 2.94%
Central Rents, Inc.
12.875%, Sr. Notes, 12/15/03 1,000,000 1,002,500
Duane Reade Corp.
12.00%, Sr. Notes, 9/15/02 4,175,000 3,851,437
Wherehouse Entertainment,
Inc.
13.00%, Sr. Subordinated
Notes, 8/01/02 (11)(12) 3,000,000 900,000
------------
5,753,937
------------
STEEL - 2.87%
Carbide/Graphite Group, Inc.
11.50%, Sr. Notes, 9/01/03 1,200,000 1,302,000
NS Group, Inc.
13.50%, Units, 7/15/03 (14) 2,400 2,016,000
Sheffield Steel Corp.
12.00%, 1st Mortgage Notes,
11/01/01 2,500,000 2,312,500
------------
5,630,500
------------
TELECOMMUNICATIONS - 13.22%
Cellular Communications
International, Inc.
0%, Units, 8/15/00 (15) 4,000 2,350,000
Dial Call Communications
0/10.25%, Sr. Discount Notes,
12/15/05 (1) 3,000,000 1,440,000
Dial Call Communications
0/12.25%, Sr. Discount Notes,
4/15/04 (1) 2,000,000 1,050,000
Geotek Communication, Inc.
0/15.00%, Units, 7/15/05
(1)(2)(16) 5,900 3,038,500
Heartland Wireless
Communications, Inc.
13.00%, Units, 4/15/03 (2)(6) 4,425 5,011,312
Intelcom Group (USA), Inc.
0/13.50%, Units, 9/15/05
(1)(2)(17) 200 1,130,000
IXC Communications, Inc.
12.50%, Sr. Notes, 10/01/05
(2) 4,000,000 4,090,000
Mobile Telecommunication
Technologies Corp.
13.50%, Sr. Notes, 12/15/02 2,000,000 2,265,000
Nextel Communications, Inc.
0/9.75%, Sr. Discount Notes,
8/15/04 (1) 3,000,000 1,537,500
</TABLE>
12
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
Security
Principal Amount/Units Value
<S> <C> <C>
WinStar Communications, Inc.
0/14.00%, Units, 10/15/05
(1)(2)(18) 2,550 $ 3,990,750
------------
25,903,062
------------
TEXTILE - 0.92%
JPS Textile Group, Inc.
10.25%, Subordinated Notes,
6/01/99 $ 2,000,000 1,810,000
------------
TRANSPORTATION - 3.06%
Burlington Motor Holdings,
Inc.
11.50%, Sr. Subordinated
Notes, 11/01/03 4,950,000 1,658,250
Great Dane Holdings, Inc.
12.75%, Sr. Subordinated
Debentures, 8/01/01 1,250,000 1,156,250
Great Dane Holdings, Inc.
14.50%, Subordinated
Debentures, 1/01/06 3,500,000 3,176,250
------------
5,990,750
------------
UTILITY - 2.32%
California Energy Co, Inc.
0/10.25%, Sr. Discount Notes,
1/15/04 (1) 5,000,000 4,537,500
------------
TOTAL DOMESTIC CORPORATE
BONDS & NOTES
(cost $141,546,620) 137,081,551
------------
FOREIGN BONDS & NOTES -
16.85%
BANKING - 2.18%
Banco De Galicia
9.00%, Notes, 11/01/03 1,000,000 763,750
Banco Nacional De Mexico
7.00%, Notes, 12/15/99 (19) 1,500,000 1,185,000
Banco Rio De La Plata
8.75%, Notes, 12/15/03 3,000,000 2,332,500
------------
4,281,250
------------
CABLE - 0.60%
TeleWest plc
0/11.00%, Debentures,
10/01/07 (1) 2,000,000 1,175,000
------------
FOOD/BEVERAGE - 0.95%
Gruma SA de CV
9.75%, Sr. Notes, 3/09/98 1,925,000 1,857,625
------------
FOREIGN GOVERNMENT - 2.01%
Federal Republic of Brazil
Capitalization Bonds
8.00%, Government Guaranty,
4/15/14 (20) 2,759,141 1,414,060
Federal Republic of Brazil
Eligible Interest Bonds
6.8125%, Debentures, 4/15/06
(10) 2,000,000 1,332,500
Republic Of Argentina
6.8125%, Debentures, 3/31/05
(10) 2,000,000 1,195,000
------------
3,941,560
------------
</TABLE>
13
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Security
Principal Amount/Shares Value
<S> <C> <C>
PAPER - 5.45%
APP International Finance Co.
V.B.
11.75%, Guaranteed Sr.
Secured Notes, 10/01/05 $ 2,800,000 $ 2,870,000
Empaques Ponderosa SA
8.75%, Sr. Notes, 12/06/96 3,449,000 3,336,908
Grupo Industrial Durango
12.00%, Notes, 7/15/01 3,250,000 2,908,750
Indah Kiat International
Finance
12.50%, Guaranteed Sr.
Secured Notes, 6/15/06 1,500,000 1,552,500
------------
10,668,158
------------
UTILITIES - 5.66%
Invergas SA
12.50%, Sr. Notes, 12/16/99 3,925,000 3,787,625
MetroGas SA
12.00%, Sr. Notes, 8/15/00 2,000,000 1,945,000
Sodigas
10.50%, Sr. Notes, 7/06/99 2,500,000 2,356,250
Telecom Brazil
11.50%, Guaranteed Sr.
Secured Notes, 12/09/99 (10) 3,000,000 3,007,500
------------
11,096,375
------------
TOTAL FOREIGN BONDS & NOTES
(cost $31,917,198) 33,019,968
------------
DOMESTIC COMMON STOCK - 0.81%
(12)
ELECTRICAL EQUIPMENT - 0.69%
Berg Electronics Holding
Corp. 200,000 1,350,000
------------
GAMING - 0.00%
Capital Gaming International,
Inc. 26,835 6,226
------------
PRINTING/PUBLISHING - 0.08%
Affiliated Newspapers
Investments, Inc. (13) 4,900 147,000
------------
RETAIL - 0.04%
Thrifty Payless Holdings,
Inc. 19,000 80,750
------------
TOTAL DOMESTIC COMMON STOCK
(cost $1,557,251) 1,583,976
------------
DOMESTIC PREFERRED STOCK -
5.98%
BANKING - 0.98%
First Nationwide Bank 11.50% 17,000 1,929,500
------------
CONGLOMERATE - 2.01%
BCP/Essex Holdings 15.00% 151,595 3,941,470
------------
HEALTHCARE - 2.73%
Foxmeyer Health Corp. $4.20
(21) 99,966 3,711,237
Intracel Corp.
8.00%, Series A (19)(22) 200,409 1,628,323
------------
5,339,560
------------
</TABLE>
14
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
Security
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
INDUSTRIAL - 0.23%
Telos Corp. 12.00% (21) 101,687 $ 457,592
------------
RETAIL - 0.03%
Color Tile
13.00%, Series A 20,000 50,000
------------
TOTAL DOMESTIC PREFERRED
STOCK
(cost $11,765,421) 11,718,122
------------
DOMESTIC WARRANTS - 1.06%
(12)
AEROSPACE - 0.00%
Sabreliner Corp.
(expires 9/01/99) 1,250 6,250
------------
BROADCASTING - 0.90%
Commodore Media, Inc.
(expires 5/01/00) 7,500 712,500
Spanish Broadcasting Systems,
Inc.
(expires 6/30/99) 5,000 1,050,000
------------
1,762,500
------------
BUILDING/SUPPLIES - 0.02%
Waxman Industries Inc.
(expires 6/01/04) (2) 118,000 29,500
------------
CONSUMER GROUP - 0.00%
Chattem, Inc.
(expires 6/17/99) (2) 1,300 4,225
------------
ENTERTAINMENT - 0.00%
Sam Houston Race Park
(expires 7/15/99) 6,000 0
------------
GAMING - 0.00%
Capital Gaming International,
Inc.
(expires 2/01/99) 20,250 608
------------
RETAIL - 0.11%
Central Rents, Inc.
(expires 2003) 3,900 214,500
------------
STEEL - 0.03%
Sheffield Steel Corp.
(expires 11/01/01) 12,500 62,500
------------
</TABLE>
15
<PAGE>
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Security
Principal Amount/Shares Value
- -----------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 0.00%
CHC Helicopter Corp.
(expires 10/29/98) 2,000 $ 2,000
------------
TOTAL DOMESTIC WARRANTS
(cost $1,781,495) 2,082,083
------------
TOTAL INVESTMENT SECURITIES -
94.67%
(Cost $188,567,985) 185,485,700
------------
REPURCHASE AGREEMENTS - 2.27%
Agreement with Bear Stearns
bearing interest at 5.80%
dated 10/31/95, to be
repurchased 11/01/95 in the
amount of $4,435,947 and
collateralized by $3,795,000
U.S. Treasury Bonds, 7.875%
due 2/15/21 (cost $4,435,232) $ 4,435,232 4,435,232
Agreement with Bear Stearns
bearing interest at 5.90%
dated 10/31/95, to be
repurchased 11/01/95 in the
amount of $3,293,340 and
collateralized by $1,239,000
U.S. Treasury Bonds, 7.875%
due 2/15/21 and $1,825,000
U.S. Treasury Notes, 6.25%
due 2/15/03 (cost $3,292,800) 3,292,800 3,292,800
OTHER ASSETS LESS LIABILITIES
- -3.06% 2,710,226
------------
NET ASSETS - 100.00% $195,923,958
------------
------------
</TABLE>
(1) Step bond.
(2) Sale restricted to qualified institutional investors.
(3) A unit consists of $1,000 par value 12.50%, Series A Notes, 7/01/03
and .10 share of common stock.
(4) A unit consists of $1,000 par value 14.50%, Sr. Discount Notes,
8/15/05 and 1 warrant.
(5) A unit consists of $1,000 par value 12.875%, Sr. Discount Notes,
6/01/04 and 6 warrants.
(6) A unit consists of $1,000 par value 13.00%, Sr. Notes, 4/15/03 and 6
warrants.
(7) A unit consists of $1,000 par value 13.00%, Sr. Notes, 4/15/03 and 3
warrants.
(8) A unit consists of $1,000 par value 13.75%, Sr. Secured Notes, 5/15/02
and 4 common stock Appreciation Rights.
(9) A unit consists of $1,000 par value Sr. Subordinated Notes, 8/15/01
and 13 shares class B stock.
(10) Floating Rate Bond. Rate as of October 31, 1995.
(11) Defaulted security.
(12) Non-income producing securities.
(13) Part or all of the security position has been loaned to brokers.
(14) A unit consists of $1,000 par value 13.50%, Sr. Secured Notes, 7/15/03
and 1 warrant.
(15) A unit consists of $1,000 par value, Sr. Discount Notes, 8/15/00 and 1
warrant.
(16) A unit consists of $1,000 par value 15.00%, Discount Notes, 7/15/05
and 30 warrants.
(17) A unit consists of $10,000 par value 13.50%, Sr. Discount Notes,
9/15/05 and 33 warrants.
(18) A unit consists of $2,000 par value 14.00%, Sr. Discount Notes,
10/15/05 and $1,000 par value Convertible Sr. Subordinated Notes.
(19) Convertible Bond.
(20) Interest paid partial cash/partial capitalization.
(21) Payment-in-kind security.
(22) Private placement.
See accompanying notes to financial statements.
16
<PAGE>
NORTHSTAR ADVANTAGE TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
Northstar Advantage Northstar Advantage
Income and Growth High Total Return
Fund Fund
------------------------------------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $161,057,272 and
$188,567,985, respectively) $175,605,199 $185,485,700
Repurchase agreements 13,404,226 7,728,032
Dividends and interest receivable 1,484,609 4,103,127
Receivable for shares of beneficial
interest sold 76,824 2,760,906
Receivable for investments sold 0 1,205,775
Prepaid expenses 33,909 32,715
------------------------------------------
Total Assets 190,604,767 201,316,255
------------------------------------------
LIABILITIES:
Payable for shares of beneficial
interest reacquired 192,272 142,816
Investment advisory fee payable 121,580 119,947
Distribution fee payable 116,416 108,258
Transfer agent fee payable 56,450 53,883
Administrative services fee payable 16,211 15,993
Accounting fee payable 15,519 16,383
Accrued expenses 47,693 63,571
Deposit for securities loaned 0 3,292,800
Payable for investments purchased 0 1,578,646
------------------------------------------
Total Liabilities 566,141 5,392,297
------------------------------------------
NET ASSETS $190,038,626 $195,923,958
------------------------------------------
------------------------------------------
NET ASSETS COMPOSED OF:
Shares of beneficial interest, $.01
par value outstanding (unlimited
shares authorized) Paid-in-Capital $176,931,093 $203,235,432
Undistributed net investment income 364,359 190,021
Accumulated net realized loss on
investments (1,804,753) (4,419,210)
Net unrealized appreciation
(depreciation) of investments 14,547,927 (3,082,285)
------------------------------------------
Net Assets $190,038,626 $195,923,958
------------------------------------------
------------------------------------------
CLASS A:
Net Assets $76,030,530 $88,551,558
------------------------------------------
Shares outstanding 7,001,607 19,776,065
------------------------------------------
Net asset value and redemption
value per share (net assets/shares
outstanding) $10.86 $4.48
------------------------------------------
Maximum offering price per share
(net asset value plus sales charge
of 4.75% of offering price) $11.40 $4.70
------------------------------------------
CLASS B:
Net Assets $60,346,907 $96,361,684
------------------------------------------
Shares outstanding 5,567,670 21,539,899
------------------------------------------
Net asset value and offering price
per share $10.84 $4.47
------------------------------------------
CLASS C:
Net Assets $53,661,189 $11,010,716
------------------------------------------
Shares outstanding 4,955,893 2,451,305
------------------------------------------
Net asset value and offering price
per share $10.83 $4.49
------------------------------------------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
NORTHSTAR ADVANTAGE TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
Northstar Advantage Northstar Advantage
Income and Growth High Total Return
Fund Fund
-------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of withholding tax
of $2,665 on Income and Growth
Fund) $3,160,689 $609,167
Interest 4,402,462 15,019,141
-------------------------------------
Total investment income 7,563,151 15,628,308
-------------------------------------
EXPENSES:
Investment advisory and management
fees 1,158,432 941,310
Distribution fees:
Class A 221,615 196,152
Class B 490,136 548,708
Class C 315,723 52,534
Transfer agent fees and expenses:
Class A 126,285 119,690
Class B 95,758 101,568
Class C 59,136 10,500
Administrative services fees 154,457 125,508
Fund accounting fees 111,437 93,094
Printing and postage expenses 46,202 41,946
Custodian fees and expenses 37,059 29,670
Registration fees 35,214 52,156
Miscellaneous expenses 59,562 57,269
-------------------------------------
Total expenses 2,911,016 2,370,105
-------------------------------------
NET INVESTMENT INCOME 4,652,135 13,258,203
-------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized loss on investments (1,378,420) (2,572,908)
Net realized loss on foreign
currency (38,505) 0
Net change in unrealized
appreciation of investments 16,414,821 4,695,216
-------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 14,997,896 2,122,308
-------------------------------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $19,650,031 $15,380,511
-------------------------------------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
NORTHSTAR ADVANTAGE TRUST
STATEMENT OF CHANGES IN NET ASSETS
[LOGO]
<TABLE>
<CAPTION>
Northstar Advantage Northstar Advantage
Income and Growth Fund High Total Return Fund
-------------------------- -----------------------------
For the year For the period For the year For the period
ended ended ended ended
October 31, 1995 October 31, 1994 October 31, 1995 October 31, 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $4,652,135 $2,239,551 $13,258,203 $5,080,521
Net realized loss on investments (1,378,420) (426,333) (2,572,908) (1,846,302)
Net realized loss on foreign currency (38,505) 0 0 0
Net change in unrealized appreciation
(depreciation) of investments 16,414,821 (1,866,894) 4,695,216 (7,777,501)
----------------------------------------------------------------------
Increase (decrease) in net assets resulting
from operations 19,650,031 (53,676) 15,380,511 (4,543,282)
FROM DIVIDENDS TO SHAREHOLDERS:
Net investment income:
Class A (2,390,482) (1,480,853) (7,078,564) (3,850,899)
Class B (1,286,761) (389,115) (5,602,745) (989,495)
Class C (885,802) (55,809) (544,101) (82,899)
----------------------------------------------------------------------
(4,563,045) (1,925,777) (13,225,410) (4,923,293)
----------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 79,489,052 124,617,812 128,604,858 102,945,785
Net asset value of shares issued to shareholders
in reinvestment of dividends 2,970,631 1,227,407 5,240,098 2,042,914
----------------------------------------------------------------------
82,459,683 125,845,219 133,844,956 104,988,699
Cost of shares redeemed (22,320,893) (9,132,916) (19,082,236) (16,525,987)
----------------------------------------------------------------------
Net increase in net assets derived from capital
share transactions 60,138,790 116,712,303 114,762,720 88,462,712
----------------------------------------------------------------------
Net increase in net assets 75,225,776 114,732,850 116,917,821 78,996,137
NET ASSETS:
Beginning of period 114,812,850 80,000 79,006,137 10,000
----------------------------------------------------------------------
End of period (including undistributed net
investment income at October 31, 1995 and
October 31, 1994 of $402,864, $190,021 and
$313,774, $157,228, respectively) $190,038,626 $114,812,850 $195,923,958 $79,006,137
----------------------------------------------------------------------
----------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
NORTHSTAR ADVANTAGE TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT
EACH PERIOD
<TABLE>
<CAPTION>
Ratio of
Net Ratio of net
realized & Dividends Net expenses investment
Net Asset unrealized declared Net Asset Assets, to income to
Value, Net gain (loss) Total from from net Value, end of average average
Period beginning investment on investment investment end of Total period net net Portfolio
ended of period income investments operations income period Return (000's) assets assets turnover
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Income and Growth Fund, Class A
- ---------------------------------------------------------------------------------------------------------------------------------
11/08/93-
10/31/94 $10.00 $0.30 ($0.05) $0.25 ($0.25) $10.00 2.48% $72,223 1.50% 3.73% 26%
10/31/95 10.00 0.35 0.84 1.19 (0.33) 10.86 13.19 76,031 1.51 3.39 91
Income and Growth Fund, Class B
- ---------------------------------------------------------------------------------------------------------------------------------
2/09/94-
10/31/94 10.64 0.20 (0.65) (0.45) (0.20) 9.99 (4.20) 37,767 2.20 3.00 26
10/31/95 9.99 0.27 0.85 1.12 (0.27) 10.84 12.31 60,347 2.23 2.66 91
Income and Growth Fund, Class C
- ---------------------------------------------------------------------------------------------------------------------------------
3/21/94-
10/31/94 10.37 0.20 (0.38) (0.18) (0.20) 9.99 (1.75) 4,823 2.20 2.87 26
10/31/95 9.99 0.27 0.85 1.12 (0.28) 10.83 12.33 53,661 2.22 2.67 91
High Total Return Fund, Class A
- ---------------------------------------------------------------------------------------------------------------------------------
11/08/93-
10/31/94 5.00 0.41 (0.60) (0.19) (0.40) 4.41 (4.11) 50,797 1.50 10.09 163
10/31/95 4.41 0.48 0.07 0.55 (0.48) 4.48 13.02 88,552 1.55 10.90 145
High Total Return Fund, Class B
- ---------------------------------------------------------------------------------------------------------------------------------
2/09/94-
10/31/94 5.20 0.33 (0.80) (0.47) (0.32) 4.41 (9.30) 25,880 2.20 9.72 163
10/31/95 4.41 0.45 0.06 0.51 (0.45) 4.47 11.97 96,362 2.25 10.20 145
High Total Return Fund, Class C
- ---------------------------------------------------------------------------------------------------------------------------------
3/21/94-
10/31/94 5.06 0.26 (0.65) (0.39) (0.26) 4.41 (7.21) 2,330 2.20 9.46 163
10/31/95 4.41 0.44 0.09 0.53 (0.45) 4.49 12.44 11,011 2.27 10.18 145
</TABLE>
See accompanying notes to financial statements
20
<PAGE>
NORTHSTAR ADVANTAGE TRUST
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1995
[LOGO]
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - The Northstar Advantage Trust, (formally the NWNL Northstar
Series Trust), a business trust, was organized under the laws of the
Commonwealth of Massachusetts on August 18, 1993, and is registered under the
Investment Company Act of 1940 as a diversified open-end management investment
company. The names of each of the two investment series which comprise the Trust
(the "Funds") and their respective investment objectives are set forth below.
Each Fund commenced its public offering of Class A shares on November 8, 1993.
The Class B and Class C share offerings commenced on February 9, 1994 and March
21, 1994, respectively.
Northstar Advantage Income and Growth Fund, (FORMALLY NWNL NORTHSTAR
INCOME AND GROWTH FUND), ("INCOME AND GROWTH FUND") is a diversified
portfolio with the investment objective of current income balanced with the
objective of achieving capital appreciation. The Fund seeks to achieve its
objective through investments in a diversified group of securities selected
for their prospects of current yield and capital appreciation.
Northstar Advantage High Total Return Fund, (FORMALLY NWNL NORTHSTAR
HIGH YIELD BOND FUND), ("TOTAL RETURN FUND") is a diversified portfolio
whose investment objective is to seek high income. The Fund invests
primarily in a diversified group of fixed income securities which are
selected for high income, including lower rated fixed income securities,
convertible securities, securities issued by U.S. companies in foreign
currencies, and securities issued by foreign governments and companies.
Security Valuation - Equity securities are valued at the closing sale prices
reported on recognized securities exchanges or lacking any sales, at the last
available bid price. Prices of long-term debt securities are valued on the basis
of last reported sales price, or if no sales are reported, the value is
determined based upon the mean of representative quoted bid or asked prices for
such securities, or, if such prices are not available, at prices provided by
market makers, or at prices for securities of comparable maturity, quality and
type. Short-term debt instruments with remaining maturities of less than 60 days
are valued at amortized cost, unless the Trustees determine that amortized cost
does not reflect the fair value of such obligations. Securities for which market
quotations are not readily available are valued at fair value determined in good
faith by or under direction of the Trustees of the Trust. The books and records
of the Funds are maintained in U.S. dollars. Securities quoted in foreign
currencies are translated into in U.S. dollars based on the prevailing exchange
rates on that day. The Adviser uses independent pricing services to price the
Funds' securities.
Security Transactions, Investment Income, Expenses and Distributions to
Shareholders - Security transactions are recorded on the trade date. Realized
gains or losses on sales of investments are calculated on the identified cost
basis. Interest income is recorded on the accrual basis except when collection
is not expected; discounts are accrued, and premiums amortized to par at
maturity; dividend income is recorded on the ex-dividend dates. Income, expenses
(except class specific expenses), and realized/unrealized gains/losses, are
allocated proportionately to each class of shares based upon the relative net
asset value of outstanding shares. Dividends from net investment income are
declared and paid monthly by the Total Return Fund, and declared and paid
quarterly by the Income and Growth Fund. Distributions of net realized capital
gains, if any, are declared annually; however, to the extent that a net realized
capital gain can be reduced by a capital loss carryover, such gain will not be
distributed.
Net realized and unrealized gain (loss) on foreign currency transactions
represents the foreign exchange.
(1) gains and losses from the sale of holdings of foreign currencies, (2)
gains and losses between trade date and settlement date on investment securities
transactions and forward exchange contracts, and (3) gains and losses from the
difference between amounts of interest and dividends recorded and the amounts
actually received.
The Funds may periodically make reclassifications among certain of their
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulations which may differ from generally accepted accounting
principles.
Repurchase Agreements - The Funds' Custodian takes possession of collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a marked-to-market basis to assure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Funds have the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
21
<PAGE>
NORTHSTAR ADVANTAGE TRUST
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1995
Federal Income Taxes - The Trust intends to comply with the special
provisions of the Internal Revenue Code available to investment companies and to
distribute all of the taxable net income to their respective shareholders.
Therefore, no Federal income tax provision or excise tax provision is required.
Organization Costs - Costs incurred by the Trust in connection with its
organization of each Fund have been deferred and are being amortized over a
period of five years from the date the Funds commenced operations. Each Fund
offers three classes of shares.
NOTE 2. INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
Northstar Investment Management Corporation (the "Adviser") serves as each
Fund's investment adviser. Each Fund pays the Adviser an investment advisory fee
calculated at an annual rate of .75% of each Fund's average daily net assets.
For the twelve months ended October 31, 1995, the Adviser earned $2,099,742 in
investment advisory fees. Northstar Administrators Corporation (the
"Administrator"), an affiliate of the Adviser, serves as each Fund's
administrator. The Funds pay the Administrator a fee calculated at an annual
rate of .10% of each Fund's average daily net assets, and an annual shareholder
account servicing fee of $5.00, payable semi-annually, for each account of
beneficial owners of shares. For the twelve months ended October 31, 1995, the
Administrator earned $279,965 in administrative fees. Northstar Distributors,
Inc. (the "Distributor"), an affiliate of the Adviser and the Administrator, is
the distributor of each Fund's shares. Under separate Plans of Distribution
pertaining to Class A, Class B, and Class C shares, the Trust pays the
Distributor monthly service fees at an annual rate of .25% of the average daily
net assets in the case of Class A, Class B and Class C shares, and monthly
distribution fees at the annual rate of .05% of the average daily net assets of
Class A shares, and .75% of the average daily net assets of Class B and Class C
shares. At October 31, 1995 the Trust owed the Distributor $224,674 in service
and distribution fees. The Distributor also receives the proceeds of the initial
sales charges paid by shareholders upon the purchase of Class A shares, and the
contingent deferred sales charge paid by shareholders upon certain redemptions
of Class A, Class B and Class C shares. For the twelve months ended October 31,
1995, the Distributor earned the following amounts in sales charges:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
-------- -------- -------
<S> <C> <C> <C>
Initial Sales Charges $310,559 N/A N/A
Contingent Deferred Sales Charges $ 17,754 $372,834 $6,805
</TABLE>
NOTE 3. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
(excluding short-term investments) for the twelve months ended October 31, 1995,
were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
------------- -------------
<S> <C> <C>
Aggregate Purchases $199,344,210 $281,322,220
Aggregate Sales $133,959,339 $174,808,342
</TABLE>
NOTE 4. PORTFOLIO SECURITIES (TAX BASIS)
The cost of securities for federal income tax purposes and the aggregate
appreciation and depreciation of securities at October 31, 1995 were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
------------- -------------
<S> <C> <C>
Cost (tax basis) $161,064,292 $188,659,480
Gross unrealized appreciated securities 17,041,061 7,607,693
Gross unrealized depreciated securities 2,500,154 10,781,473
------------- -------------
Net unrealized appreciation/depreciation $ 14,540,907 $ (3,173,780)
------------- -------------
</TABLE>
NOTE 5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each class of shares of each Fund for the
twelve months ended October 31, 1995, were as follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
------------- -------------
<S> <C> <C>
I. CLASS A
Shares sold 1,096,176 10,429,281
Reinvested dividends 135,106 737,521
Shares redeemed (1,453,383) (2,896,286)
------------- -------------
Net increase (decrease) (222,101) 8,270,516
------------- -------------
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
------------- -------------
<S> <C> <C>
II. CLASS B
Shares sold 2,311,816 16,531,155
Reinvested dividends 72,181 397,287
Shares redeemed (597,155) (1,252,934)
------------- -------------
Net increase 1,786,842 15,675,508
------------- -------------
</TABLE>
22
<PAGE>
NORTHSTAR ADVANTAGE TRUST
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
------------- -------------
III. CLASS C
<S> <C> <C>
Shares sold 4,511,380 2,002,533
Reinvested dividends 82,927 52,744
Shares redeemed (121,341) (131,827)
------------- -------------
Net increase 4,472,966 1,923,450
------------- -------------
</TABLE>
Transactions in capital shares of each class of shares of each Fund for the
period from inception of the class offering and ended October 31, 1994 were as
follows:
<TABLE>
<CAPTION>
INCOME AND TOTAL RETURN
GROWTH FUND FUND
------------- -------------
<S> <C> <C>
I. CLASS A
Shares sold 7,879,717 14,267,985
Reinvested dividends 95,456 363,205
Shares redeemed (759,465) (3,127,641)
------------- -------------
Net increase 7,215,708 11,503,549
------------- -------------
II. CLASS B
Shares sold 3,886,168 6,077,162
Reinvested dividends 22,686 63,887
Shares redeemed (128,026) (276,658)
------------- -------------
Net increase 3,780,828 5,864,391
------------- -------------
II. CLASS C
Shares sold 486,429 521,230
Reinvested dividends 5,029 8,953
Shares redeemed (8,536) (2,328)
------------- -------------
Net increase 482,922 527,855
------------- -------------
</TABLE>
NOTE 6. CREDIT RISK AND DEFAULTED SECURITIES
Although the Funds have a diversified portfolio, the Total Return Fund had
69.97% of its portfolio invested in lower rated and comparable quality unrated
high yield securities. Investments in higher yield securities are accompanied by
a greater degree of credit risk and such lower rated securities tend to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities, because such securities are generally unsecured and
are often subordinated to other creditors of the issuer. At October 31, 1995,
the Total Return Fund held Sam Houston Race Park and Wherehouse Entertainment,
Inc., securities in default. The aggregate value of these securities represented
$1,305,000 or .66% of the Total Return Fund's net assets. Subsequent to October
31, 1995, Burlington Motor Holdings, Inc. in the Total Return Fund defaulted.
The value of the security at October 31, 1995 represented $1,658,250 or .80% of
the Fund's net assets.
For financial reporting purposes, it is each Fund's accounting practice to
discontinue accrual of income and provide an estimate for probable losses due to
unpaid interest income on defaulted bonds for the current reporting period.
NOTE 7. SECURITY LOANS
Each Fund may lend its securities to brokers, dealers and other financial
institutions in amounts up to one third of the value of its total assets. The
loans are fully collateralized at all times by cash or liquid high grade
securities. As with other extensions of credit, each Fund may bear the risk of
delay in recovery or even loss of rights in the collateral should the borrower
of the securities fail financially. The Funds receive compensation for lending
its securities in the form of fees or from all or a portion of the income from
investment of the collateral. The Funds also continue to earn income on the
securities loaned. At October 31, 1995, the Total Return Fund had securities on
loan in aggregate value of $3,013,500 and collateral of $3,292,800.
NOTE 8. FEDERAL INCOME TAX - CAPITAL LOSS CARRYFORWARD
At October 31, 1995, Income and Growth Fund had capital loss carryforwards
expiring October 31, 2002 and 2003 of $426,333 and $1,371,400, respectively.
Total Return Fund had capital loss carryforwards expiring October 31, 2002 and
2003 of $1,846,302 and $2,478,205, respectively.
23
<PAGE>
NORTHSTAR ADVANTAGE TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To The Shareholders and Trustees of
Northstar Advantage Trust
We have audited the accompanying statement of assets and liabilities of the
Northstar Advantage Trust, (comprising the Northstar Advantage Income and Growth
Fund and the Northstar Advantage High Total Return Fund (the "Funds")) including
the portfolios of investments, as of October 31, 1995, and the related
statements of operations, the statement of changes in net assets and the
financial highlights for the year then ended and for the period November 8, 1993
(commencement of operations) to October 31, 1994. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the Northstar Advantage Trust as of October
31, 1995, the results of their operations, the changes in their net assets, and
the financial highlights for each of the periods referred to above, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
December 15, 1995
24
<PAGE>
[LOGO]
<TABLE>
<S> <C> <C>
TRUSTEES
Paul S. Doherty Mark L. Lipson John G. Turner
Robert B. Goode David W. C. Putnam David W. Wallace
Alan L. Gosule John R. Smith Marjory Williams
</TABLE>
<TABLE>
<S> <C>
PRINCIPAL OFFICERS
John G. Turner - Chairman Ernest N. Mysogland - Vice President
Mark L. Lipson - President Geoffrey Wadsworth - Vice President
Lisa Hurley - Vice President &
Robert Thomas - Vice President Secretary
Agnes Mullady - Vice President &
Thomas Ole Dial - Vice President Treasurer
</TABLE>
<TABLE>
<S> <C>
INVESTMENT ADVISER ADMINISTRATOR
NORTHSTAR INVESTMENT NORTHSTAR ADMINISTRATORS CORPORATION
MANAGEMENT CORPORATION Two Pickwick Plaza
Two Pickwick Plaza Greenwich, CT 06830
Greenwich, CT 06830
TRANSFER AGENT
DISTRIBUTOR FUND ACCOUNTANT
NORTHSTAR DISTRIBUTORS, INC. THE SHAREHOLDER SERVICES GROUP, INC.
Two Pickwick Plaza One Exchange Place
Greenwich, CT 06830 Boston, MA 02109
CUSTODIAN
CUSTODIAL TRUST COMPANY
101 Carnegie Center
Princeton, NJ 08540-6231
</TABLE>
25
<PAGE>
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