NORTHSTAR GALAXY TRUST, 485BPOS, 1999-04-30

NORTHSTAR GALAXY TRUST
485BPOS, 1999-04-30

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As filed with the Securities and Exchange Commission on April 30, 1999

Registration Nos. 33-73140; 811-8220

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. 14

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 15

NORTHSTAR GALAXY TRUST
---------------------------------------------------------------
(Exact name of Registrant as specified in charter)

300 First Stamford Place, Stamford, CT 06902
-----------------------------------------------------
(Address of Principal Executive Offices)

(203)602-7881
--------------------------------------
(Registrant's telephone number)

Mark L. Lipson
c/o Northstar Investment Management Corporation
300 First Stamford Place, Stamford, CT 06902
-----------------------------------------------------
(Name and address of agent for service)

Copies of all correspondence to:
Jeffrey L. Steele, Esq.
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006-2401

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:

X on April 30, 1999 pursuant to paragraph (b)
- - -

60 days after filing pursuant to paragraph (a)(1)
- - -

on April 30, 1999 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.

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

[Northstar Logo]
Northstar
Galaxy Trust
Prospectus
April 30, 1999

This prospectus contains important information about investing in the Northstar
Galaxy Trust Portfolios. In this prospectus, we have divided our portfolios into
two categories: GROWTH PORTFOLIOS: the Northstar Emerging Growth Portfolio,
Northstar Growth + Value Portfolio, Northstar International Value Portfolio and
Northstar Research Enhanced Index Portfolio; and INCOME PORTFOLIOS: the
Northstar High Yield Bond Portfolio. Please note that your investment: is not a
bank deposit, is not insured or guaranteed by the FDIC, the Federal Reserve
Board or any other government agency, is affected by market fluctuations - there
is no guarantee that the portfolios will achieve their objectives. As with all
portfolios, the Securities and Exchange Commission (SEC) has not approved or
disapproved these securities nor has the SEC judged whether the information in
this prospectus is accurate or adequate. Any representation to the contrary is a
criminal offense.

<PAGE>

What's
Inside

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

<S> <C> <C> <C>
Objective These pages contain a description An introduction to the
of each of our portfolios including Northstar Galaxy Trust Portfolios 1
its objective, investment strategy,
risks and portfolio manager. Northstar Growth Portfolios
Emerging Growth Portfolio 2

Growth + Value Portfolio 4
Investment You'll also find:
Strategy International Value Portfolio 6

Research Enhanced Index Portfolio 8
What What you pay to invest. A list of
you pay the fees and expenses you pay - Northstar Income Portfolios
to invest both directly and indirectly - High Yield Bond Portfolio 10
when you invest in a portfolio.
Meet the portfolio managers 12

Risks How the portfolio has Information for investors 20
performed.
Portfolio earnings and your taxes 21

How the A chart that shows the portfolio's Financial highlights 22
portfolio has financial performance since
performed inception. Where to go for more information 27

</TABLE>

<PAGE>

Introduction to
the Northstar Galaxy
Trust Portfolios

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

Risk is the potential that your investment will lose money or not earn as much
as you hope. The Northstar Galaxy Trust Portfolios have varying degrees of risk,
depending on the securities they invest in. Please read this prospectus
carefully to be sure you understand the principal risks and strategies
associated with each of our portfolios. You should consult the Statement of
Additional Information (SAI) for a complete list of the risks and strategies.
If you have any questions about the Northstar Galaxy Trust Portfolios or about
choosing suitable investments, please contact your financial representative or
call us at 1-800-595-7827.

[CLIP ART]

Year 2000 update: Northstar, the Sub-Advisers, Administrator and other service
providers are taking steps to address any year 2000-related computer problems.
However, as with all companies that rely on computer systems to process
date-related information, there is some risk that these problems could disrupt
the portfolios' operations and/or the financial markets generally. There is also
the risk that a portfolio's performance may be adversely affected if the value
of its portfolio holdings decreases due to year 2000-related computer problems.

This prospectus is designed to help you make informed decisions about the
investments available under your variable annuity contract or variable life
insurance policy. You'll find details about how your annuity contract or life
insurance policy works in the accompanying prospectus.

In order to make it easy for you to find what you're looking for, we have
divided the Northstar Galaxy Trust Portfolios into two categories:

GROWTH PORTFOLIOS

Our Growth Portfolios focus on long-term growth by investing primarily in
equities.

They will suit you if you:

- are investing for the long term - at least several years
- are willing to accept higher risk in exchange for long-term growth.

INCOME PORTFOLIOS

Our Income Portfolio offers regular income, but takes higher risks to attain
higher returns.

It will suit you if you:

- want a regular stream of income
- want greater growth potential than a money market fund
- are willing to accept more risk than a money market fund.

<PAGE>

Northstar Portfolio manager
Emerging Growth Mary Lisanti
Portfolio

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OBJECTIVE

This portfolio seeks long-term capital appreciation by investing in a
diversified portfolio of equity securities.

INVESTMENT STRATEGY

The portfolio invests primarily in the common stock of smaller, lesser-known
U.S. companies that the portfolio manager feels have above average prospects for
growth. Smaller companies are companies with market capitalizations that fall
within the range of companies in the Russell 2000 Index. The market
capitalization range will change as the range of the companies included in the
Russell 2000 changes.

The portfolio manager uses a disciplined investment process, which includes
extensive database review and screening, frequent company research,
identification and implementation of a thematic approach in structuring the
portfolio and a sell discipline. Themes attempt to articulate the major social,
economic and technological trends that are likely to shape the future of
business and commerce over the next three to five years, and provide a framework
for identifying the industries and companies expected to benefit most. This top
down approach is combined with rigorous fundamental research (a bottoms up
approach) to guide stock selection and portfolio structure.

IN PERIODS OF UNUSUAL MARKET CONDITIONS AND FOR DEFENSIVE PURPOSES, THE
PORTFOLIO MAY TEMPORARILY INVEST PART OR ALL OF ITS ASSETS IN CASH OR HIGH
QUALITY MONEY MARKET SECURITIES. IN THESE CIRCUMSTANCES, THE PORTFOLIO MAY NOT
ACHIEVE ITS OBJECTIVE.

WHAT YOU PAY TO INVEST

The table to the right shows operating expenses paid each year by the portfolio.
The table does not reflect expenses and charges which are, or may be, imposed
under your annuity contract or life insurance policy. You'll find details about
these expenses and charges in the accompanying prospectus.

Operating expenses paid each year by the portfolio
(as a % of average net assets)
- ------------------------------------------------
Management fee(1) . . . . . . . . . . % 0.75
Other expenses(1) . . . . . . . . . . % 0.39
Total portfolio operating expenses(1) % 1.14
- ------------------------------------------------
(1) The adviser and administrator have agreed to waive or reimburse fees.
These figures are before the adviser reimbursed certain expenses. After
reimbursement, other expenses would have been 0.07% and total portfolio
operating expenses would have been 0.82%.

EXAMPLE

Here's an example of what you would pay in expenses if you invested $10,000,
reinvested all your dividends, the portfolio earned an average annual return of
5%, and annual operating expenses remained at the estimated level. Keep in mind
that this is only an example - actual expenses and performance may vary.

Year 1 Year 3 Year 5 Year 10
- --------------------------------
116. . 362 628 1,386

2 Northstar Emerging Growth Portfolio

<PAGE>

Northstar
Emerging Growth
Portfolio

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RISKS [CLIP ART]

All portfolios involve risk - some more than others - and there's always the
chance that you could lose money or not earn as much as you hope.

Every portfolio is affected by the economy and by the investment decisions
portfolio managers make. Because it invests in equities of small and mid-sized

companies, this portfolio may offer the potential for higher returns, but its
performance may also go up or down rapidly depending on market conditions.

The portfolio's investments in smaller companies may be subject to more abrupt
or erratic movements in price because:

- the securities of smaller companies are traded in lower volume

- smaller companies are more likely to experience changes in earnings and
growth prospects than the securities of larger, more established companies

- the value of the securities depends on the success of products or
technologies that are in a relatively early stage of development and that
may not have been tested.

The portfolio trades securities actively. This generally increases trading
costs, which can lower performance.

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

HOW THE PORTFOLIO HAS PERFORMED [CLIP ART]

The bar chart below shows you how the portfolio's performance has varied from
year to year since inception, while the table below compares the portfolio's
long-term performance with the Russell 2000 Index. This information may help
provide an indication of the portfolio's risks and potential rewards. All
figures assume reinvestment of dividends and distributions. Looking at how a
portfolio has performed in the past is important - but it's no guarantee of how
it will perform in the future.

Year by year total return (%)(1)

21.39 13.61 15.82 17.30
1995 1996 1997 1998

Best and worst quarterly performance during this period:

4th quarter 1998: up 22.61%
3rd quarter 1998: down 8.12%

Average annual total return

Russell
2000
Portfolio Index(2)
- ----------------------------------------------------------
One year, ended December 31, 1998 % 17.30 -2.54
Since inception(3) % 14.89 13.30
- ----------------------------------------------------------

(1) These figures are as of December 31 of each year. They do not reflect
expenses and charges which are, or may be, imposed under your annuity contract
or life insurance policy and would be lower if they did.

(2) The Russell 2000 Index measures the performance of securities of small
companies.
(3) The portfolio commenced operations on May 6, 1994.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

Northstar Emerging Growth Portfolio 3
<PAGE>

Northstar PORTFOLIO MANAGER
Growth + Value Louis Navellier
Portfolio

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OBJECTIVE [CLIP ART]

This portfolio seeks capital appreciation by investing in a diversified
portfolio of equity securities.

INVESTMENT STRATEGY [CLIP ART]

The portfolio invests primarily in companies the portfolio manager identifies as
either growth or value companies through quantitative analysis. Growth companies
have above average earnings or sales growth and higher price to earnings ratios.
Value companies are temporarily undervalued or out of favor, and tend to have
lower price to book ratios relative to price and higher returns on equity. The
percentage of portfolio assets allocated to the two different kinds of companies
varies depending on the portfolio manager's assessment of economic conditions
and investment opportunities.

Under normal market conditions, the portfolio invests at least 65% of its total
assets in securities purchased on the basis of the potential for capital
appreciation. The portfolio also holds preferred stocks and convertible
securities. It may invest up to 20% of its net assets in foreign issuers, but
only 10% can be in securities that are not listed on a U.S. securities exchange.

In periods of unusual market conditions and for defensive purposes, the
portfolio may temporarily invest part or all of its assets in cash or high
quality money market securities. In these circumstances, the portfolio may not
achieve its objective.

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

WHAT YOU PAY TO INVEST [CLIP ART]

Operating expenses paid each year by the portfolio
(AS A % OF AVERAGE NET ASSETS)
- ------------------------------------------------
Management fee(1) . . . . . . . . . . % 0.75
Other expenses(1) . . . . . . . . . . % 0.27
Total portfolio operating expenses(1) % 1.02
- ------------------------------------------------

(1) The adviser and administrator have agreed to waive or reimburse fees.
These figures are before the adviser reimbursed certain expenses. After
reimbursement, other expenses would have been 0.05% and total portfolio
operating expenses would have been 0.80%.

EXAMPLE

Year 1. Year 3 Year 5 Year 10
- --------------------------------
104 325 563 1,248
- --------------------------------

4 Northstar Growth + Value Portfolio

<PAGE>

Northstar
Growth + Value
Portfolio

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

RISKS [CLIP ART]

All portfolios involve risk - some more than others - and there's always the
chance that you could lose money or not earn as much as you hope.

Every portfolio is affected by the economy and by the investment decisions
portfolio managers make. Because it invests in equities, this portfolio's
performance may go up or down rapidly depending on market conditions.

This portfolio's performance will also be affected if the portfolio manager
makes an inaccurate assessment of economic conditions and investment
opportunities, and chooses growth companies that do not grow as quickly as
hoped, or value companies that continue to be undervalued by the market.

Although the manager invests in value companies to decrease volatility, these
investments may also lower the portfolio's performance.

The portfolio's investments in smaller companies may be subject to more abrupt
or erratic movements in price because:

- the securities of smaller companies are traded in lower volume

- smaller companies are more likely to experience changes in earnings and
growth prospects than the securities of larger, more established companies

- the value of the securities depends on the success of products or
technologies that are in a relatively early stage of development and that
may not have been tested.

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

HOW THE PORTFOLIO HAS PERFORMED [CLIP ART]

Year by year total return (%)(1)

24.78 22.99 14.65 19.32
- -------------------------------------------------------------------
1995 1996 1997 1998

Best and worst quarterly performance during this period:

4th quarter 1998: up 29.86%
3rd quarter 1998: down 17.04%

AVERAGE ANNUAL TOTAL RETURN

Russell
2000
Portfolio Index(2)
- ---------------------------------------
One year, ended
December 31, 1998% 19.32 -2.54
Since inception(3)% 18.12 13.30

(2) The Russell 2000 Index measures the performance of securities of small
companies.
(3) The portfolio commenced operations on May 6, 1994.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

Northstar Growth + Value Portfolio 5
<PAGE>

Northstar Portfolio managers
International Charles Brandes
Value Portfolio Jeff Busby

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OBJECTIVE [CLIP ART]

This portfolio seeks long-term capital appreciation.

INVESTMENT STRATEGY [CLIP ART]

The portfolio invests primarily in foreign companies with market capitalizations
greater than $1 billion, but it may hold up to 25% of its assets in companies
with smaller market capitalizations.

The portfolio managers apply the technique of ''value investing'' by seeking
stocks that their research indicates are priced below their long-term value.
This gives the portfolio both a possible margin of safety against price declines
and an opportunity for profit.

The portfolio holds common stocks, preferred stocks, American, European and
Global depository receipts, as well as convertible securities.

Under normal circumstances, the portfolio will invest at least 65% of its total
assets in securities of companies located in at least three countries other than
the U.S., located in Western Europe, North and South America, Australia, Asia
and other regions. The portfolio may invest up to the greater of:

- - 20% of its assets in any one country or industry, or,
- - 150% of the weighting of the country or industry in the MSCI EAFE Index,
as long as the portfolio meets any industry concentration or diversification
requirements under the Investment Company Act.

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

WHAT YOU PAY TO INVEST [CLIP ART]

Operating expenses paid each year by the portfolio
(AS A % OF AVERAGE NET ASSETS)
- ------------------------------------------------
Management fee(1) . . . . . . . . . . % 1.00
Other expenses(1) . . . . . . . . . . % 0.68
Total portfolio operating expenses(1) % 1.68
- ------------------------------------------------

(1) The adviser and administrator have agreed to waive or reimburse fees.
These figures are before the adviser reimbursed certain expenses. After
reimbursement, management fees and other expenses would have been 0.84% and
0.00%, respectively; and total portfolio operating expenses would have been
0.84%.

EXAMPLE

Year 1 Year 3 Year 5 Year 10
- --------------------------------
171. . 530 913 1,987
- --------------------------------

6 NORTHSTAR INTERNATIONAL VALUE PORTFOLIO

<PAGE>
NORTHSTAR
INTERNATIONAL
VALUE PORTFOLIO

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

RISKS [CLIP ART]

All portfolios involve risk - some more than others - and there's always the
chance that you could lose money or not earn as much as you hope.

Every portfolio is affected by the economy and by the investment decisions
portfolio managers make. Because it invests in equities of foreign companies,
this portfolio offers international diversification, but its performance may
also go up or down rapidly depending on global or foreign market conditions.

Foreign investments can also be affected by:

- adverse political, social or economic developments in foreign countries
- unfavorable currency exchange rates
- a lack of liquidity in foreign markets
- inadequate or inaccurate information about foreign companies
- accounting, auditing and/or financial reporting standards that are
different from those in the United States.

The portfolio's investments in smaller companies may be subject to more abrupt
or erratic movements in price because:

- the securities of smaller companies are traded in lower volume
- smaller companies are more likely to experience changes in earnings and
growth prospects than the securities of larger, more established
companies
- the value of the securities depends on the success of products or
technologies that are in a relatively early stage of development and that
may not have been tested.

THE PORTFOLIO DOES NOT CURRENTLY INTEND TO MAKE USE OF ANY DERIVATIVES,
INCLUDING TRANSACTIONS IN CURRENCY FORWARDS FOR HEDGING PURPOSES.

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

HOW THE PORTFOLIO HAS PERFORMED [CLIP ART]

The bar chart below shows you how the portfolio's performance has varied since
inception, while the table below compares the portfolio's performance with the
MSCI EAFE Index. This information may help provide an indication of the
portfolio's risks and potential rewards. All figures assume reinvestment of
dividends and distributions. Looking at how a portfolio has performed in the
past is important - but it's no guarantee of how it will perform in the future.

Year by year total return (%)(1)

16.93
- -------------------------------------
1998

Best and worst quarterly performance during this period:

4th quarter 1998: up 18.80%
3rd quarter 1998: down 14.03%

AVERAGE ANNUAL TOTAL RETURN

MSCI
EAFE
Portfolio Index(2)
- ---------------------------------------
One year, ended
December 31, 1998% 16.93 20.00
Since inception(3)% 12.85 5.70
- ---------------------------------------

(1) These figures are as of December 31, 1998. They do not reflect expenses
and charges which are, or may be, imposed under your annuity contract or life
insurance policy and would be lower if they did.

(2) The Morgan Stanley Capital International European Australasian Far East
(MSCI EAFE) Index measures the performance of securities listed on exchanges in
markets in Europe, Australia and the Far East.
(3) The portfolio commenced operations on August 8, 1997.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

Northstar International Value Portfolio 7
<PAGE>

Northstar Portfolio managers
Research Enhanced Index Timothy Devlin
Portfolio James Wiess

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OBJECTIVE [CLIP ART]

The portfolio seeks capital appreciation.

INVESTMENT STRATEGY [CLIP ART]

The portfolio invests primarily in companies that make up the S&P 500 Index.
Based on extensive research regarding projected company earnings and dividends,
a valuation model ranks companies in each industry group according to their
relative value. Using this valuation model, the portfolio managers select stocks
for the portfolio. Within each industry, the portfolio modestly overweights
stocks that are ranked as undervalued or fairly valued while modestly
underweighting or not holding stocks that appear overvalued. Industry by
industry, the portfolio's assets are invested so that the portfolio's industry
sector allocations and market cap weightings closely parallel those of the S&P
500.

By owning a large number of stocks within the S&P 500, with an emphasis on
those that appear undervalued or fairly valued, and by tracking the industry
weightings and other characteristics of that index, the portfolio seeks returns
that modestly exceed those of the S&P 500 over the long term with virtually the
same level of volatility.

Under normal market conditions, the portfolio invests at least 80% of its total
assets in common stocks included in the S&P 500. It may also invest in other
common stocks not included in the S&P 500. The portfolio may also invest in
certain higher-risk investments, including derivatives (generally these
investments will be limited to S&P 500 options).

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

WHAT YOU PAY TO INVEST [CLIP ART]

Operating expenses paid each year by the portfolio (as a % of average net
assets)

- -----------------------------------------------------
Management fee(1) % 0.75
Other expenses(1) % 0.54
Total portfolio operating expenses(1) % 1.29
- -----------------------------------------------------
(1) The adviser and administrator have agreed to waive or reimburse fees.
These figures are before the adviser reimbursed certain expenses. After
reimbursement, other expenses would have been 0.05% and total portfolio
operating expenses would have been 0.80%.

EXAMPLE

Year 1 Year 3 Year 5 Year 10
- -------------------------------------------------
$ 131 409 708 1,556

8 Northstar Research Enhanced Index Portfolio

<PAGE>

Northstar
Research Enhanced Index
Portfolio

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

RISKS [CLIP ART]

All portfolios involve risk - some more than others - and there's always the
chance that you could lose money or not earn as much as you hope.

Every portfolio is affected by the economy and by the investment decisions
portfolio managers make. Because it invests in equities, this portfolio may
offer the potential for higher returns, but its performance may also go up or
down rapidly depending on market conditions.

The portfolio managers try to remain fully invested in companies included in the
S&P 500, and generally do not change this strategy even temporarily, which could
make the portfolio more susceptible to poor market conditions. In addition, the
portfolio managers' use of derivative instruments may not be successful, and
may lower portfolio performance or prevent the portfolio from earning higher
returns.

HOW THE PORTFOLIO HAS PERFORMED [CLIP ART]

The portfolio commenced operations on May 6, 1994 as the Northstar Multi-Sector
Bond Fund with the investment objective of maximizing current income consistent
with the preservation of capital. From inception through April 29, 1999, the
portfolio operated under this investment objective and related investment
strategies. However, effective April 30, 1999 and pursuant to shareholder
approval, the portfolio changed its investment objective and strategies to be
managed as a large cap equity portfolio. As a result, the portfolio has no
performance history in pursuit of its current investment objective.

The table below compares the portfolio's long-term performance with the Lehman
Government/Corporate Bond Index (selected in light of the portfolio's previous
investment objective and strategies) and the S&P 500 Index.

All figures assume reinvestment of dividends and distributions. Looking at how a
portfolio has performed in the past is important - but it's no guarantee of how
it will perform in the future.

Average annual total return

Lehman
Government/ S & P
Corporate 500
Portfolio Bond Index(1) Index(2)
One year, ended December 31, 1998 % 1.02 9.47 28.57
Since inception % 7.60 8.77 26.69

(1) The Lehman Borthers Government/Corporate Bond Index measures the performance
of U.S. government bonds, U.S. corporate bonds and Yankee bonds
(2) The S & P 500 Index measures the performance of approximately 500 large
capitalization stocks.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

Northstar Research Enhanced Index Portfolio 9
<PAGE>

Northstar Portfolio manager
High Yield Jeffrey Aurigemma
Bond Portfolio Thomas Ole Dial

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OBJECTIVE [CLIP ART]

This portfolio seeks high income and capital appreciation.

INVESTMENT STRATEGY [CLIP ART]

The portfolio invests primarily in higher-yielding, lower-rated bonds (junk
bonds) to achieve high current income with potential for capital growth.
Under normal market conditions, the portfolio invests at least 65% of its total
assets in high-yielding, lower-rated U.S. dollar-denominated debt securities of
U.S. and foreign issuers. It may also invest up to 35% of its total assets in
securities denominated in foreign currencies. No more than 50% of its assets
can be in securities of foreign issuers, including 35% in emerging market debt.
Most of the debt securities the portfolio invests in are lower-rated and
considered speculative, including bonds in the lowest rating categories and
unrated bonds. It can invest up to 10%, and can hold up to 25% of its assets in
securities rated below Caa by Moody's or CCC by S&P. It also holds debt
securities that pay fixed, floating or adjustable interest rates and may hold
pay-in-kind securities and discount obligations, including zero coupon
securities.

The portfolio may also invest in equity or equity-related securities, such as
common stock, preferred stock, convertible securities and rights and warrants
attached to debt instruments.

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

WHAT YOU PAY TO INVEST [CLIP ART]

Operating expenses paid each year by the portfolio
(as a % of average net assets)

- ----------------------------------------------------
Management fee(1) % 0.75
Other expenses(1) % 0.48
Total portfolio operating expenses(1) % 1.23
- ----------------------------------------------------
(1) The adviser and administrator have agreed to waive or reimburse fees.
These figures are before the adviser reimbursed certain expenses. After
reimbursement, other expenses would have been 0.05% and total portfolio
operating expenses would have been 0.80%.

EXAMPLE

Year 1 Year 3 Year 5 Year 10
- ----------------------------------------------------
$125 390 676 1,489

10 Northstar High Yield Bond Portfolio

<PAGE>

Northstar
High Yield
Bond Portfolio

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

RISKS [CLIP ART]

All portfolios involve risk - some more than others - and there's always the
chance that you could lose money or not earn as much as you hope.

Every portfolio is affected by the economy and by the investment decisions
portfolio managers make. Because it invests in high-yield securities, this
portfolio may offer the potential for higher returns, but its performance may
also go up or down depending on market conditions.

This portfolio's performance is significantly affected by changes in interest
rates. When interest rates increase, the value of the portfolio's debt
securities - particularly those with longer durations - will go down. The value
of the portfolio's high-yield securities are particularly sensitive to changes
in interest rates, and there is a higher risk that the company that issued the
security may not be able to meet its financial obligations, or that there won't
be a market to sell the security at a reasonable price.

This portfolio's performance will also be affected if the portfolio managers
make an inaccurate assessment of economic conditions and investment
opportunities, and choose a company that, for example, declares bankruptcy and
is no longer able to make interest or principal payments.

Foreign investments can also be affected by the following:

Investments in emerging markets are affected by additional risks:

- developing countries have less mature economic structures and political
systems than those in developed countries
- they may have high inflation and rapidly changing interest and currency
exchange rates.

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

HOW THE PORTFOLIO HAS PERFORMED [CLIP ART]

The bar chart below shows you how the portfolio's performance has varied from
year to year since inception, while the table below compares the portfolio's
long-term performance with the Lehman High Yield Bond Index. This information
may help provide an indication of the portfolio's risks and potential rewards.
All figures assume reinvestment of dividends and distributions. Looking at how a
portfolio has performed in the past is important - but it's no guarantee of how
it will perform in the future.

Year by year total return (%)(1)

18.55 15.75 9.00 -0.12
- ------------------------------------------
1995 1996 1997 1998

Best and worst quarterly performance during this period:

1st quarter 1995: up 5.26%
3rd quarter 1998: down 7.97%

AVERAGE ANNUAL TOTAL RETURN

Lehman
High Yield
Portfolio Bond Index(2)
- --------------------------------------------------------------
One year, ended December 31, 1998 % -0.12 1.87
Since inception(3) % 8.77 9.67
- --------------------------------------------------------------
(1) These figures are as of December 31 of each year. They do not reflect
expenses and charges which are, or may be, imposed under your annuity contract
or life insurance policy and would be lower if they did.
(2) The Lehman Brothers High Yield Bond Index measures the performance of
fixed-income securities that are similar, but not identical, to those in the
portfolio.
(3) The portfolio commenced operations on May 6, 1994.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

Northstar High Yield Bond Portfolio 11
<PAGE>

Meet the
Portfolio
Managers

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

Jeffrey Aurigemma

Jeffrey Aurigemma has co-managed the Northstar Galaxy Trust High Yield Bond
Portfolio and managed the Northstar High Yield Fund since May 1997 and
co-managed the Northstar High Total Return Fund II and the Northstar High Total
Return Fund since March 1998. He joined Northstar in October 1993.

Mr. Aurigemma has over nine years of experience in the management of high-yield
fixed-income investments. From October 1993 through May 1997 he was a Senior
Credit Analyst for the Northstar High Total Return Fund. Before joining
Northstar, he was a Senior Analyst - Fixed Income for National Securities &
Research Corporation.

Charles Brandes

Charles Brandes has co-managed the Northstar Galaxy Trust International Value
Portfolio since the portfolio was formed in August 1997 and co-managed the
Northstar International Value Fund and the Northstar Emerging Markets Value Fund
since the funds were formed in March 1995 and January 1998, respectively. Mr.
Brandes has over 31 years of investment management experience. He founded the
general partner of Brandes Investment Partners, L.P. in 1974 and owns a
controlling interest in it. At Brandes Investment Partners, L.P., he serves as a
Managing Partner. He is a Chartered Financial Analyst and a Member of the
Association for Investment Management and Research.

Charles Brandes and Jeff Busby structure the portfolio of the Northstar Galaxy
Trust International Value Portfolio from a buy list determined by an investment
committee of Brandes.

Jeff Busby

Jeff Busby has co-managed Northstar Galaxy Trust International Value Portfolio
since the portfolio was formed in August 1997 and co-managed the Northstar
International Value Fund since the fund was formed in March 1995. Mr. Busby has
over 13 years of investment management experience. At Brandes Investment
Partners, L.P., he serves as a Managing Partner. He is also responsible for
overseeing all trading activities for the firm. He is a Chartered Financial
Analyst, and a Member of the Association for Investment Management and Research
and the Financial Analysts Society.

Timothy Devlin

Timothy Devlin has co-managed the Northstar Galaxy Trust Research Enhanced Index
Portfolio since April 1999 and co-managed the Northstar Research Enhanced Index
Fund since the fund was formed in December 1998. At J.P. Morgan Investment
Management Inc., he serves as a Portfolio Manager and Member of the Structured
Equity Group.

Mr. Devlin has over 12 years of investment management experience. Before joining
J.P. Morgan Investment Management Inc. in 1996, Mr. Devlin was a Portfolio
Manager for nine years at Mitchell Hutchins Asset Management, Inc. where he
managed quantitatively-driven portfolios for institutional and retail investors.

Thomas Ole Dial

Thomas Ole Dial has co-managed the Northstar Galaxy Trust High Yield Bond
Portfolio since May 1997, co-managed the Northstar High Total Return Fund II
since March 1998, managed the Northstar Balance Sheet Opportunities Fund since
May 1997and managed the Northstar High Total Return Fund since the fund was
formed in November 1993. Mr. Dial, who has over 12 years of investment
management experience, joined Northstar in October 1993.

Before joining Northstar, Mr. Dial was Executive Vice President, Chief
Investment Officer - Fixed Income of National Securities & Research Corporation,
and Senior Portfolio Manager of the National Bond Fund from August 1990 through
July 1993.

Mary Lisanti

Mary Lisanti has managed the Northstar Galaxy Trust Emerging Growth Portfolio
since November 1998, co-managed the Northstar Mid-Cap Growth Fund since the fund
was formed in August 1998, managed the Northstar Special Fund since July 1998
and managed the Northstar Growth Fund since August 1998. She joined Northstar in
May 1998.

Ms. Lisanti has over 20 years of experience in small and mid-cap investments.
Before joining Northstar, Ms. Lisanti was a Portfolio Manager at Strong Capital
Management where she managed the Strong Small Cap Fund and co-managed the Strong
Mid Cap Fund. From 1993 to 1996, Ms. Lisanti was a Managing Director and Head of
Small and Mid-Capitalization Equity Strategies at Bankers Trust Corp. where she
managed the BT Small Cap Fund and the BT Capital Appreciation Fund. Prior to
Bankers Trust, Ms. Lisanti was a Portfolio Manager with the Evergreen Funds. She
began her career as an Analyst specializing in emerging growth stocks with
Donaldson, Lufkin & Jenrette and Shearson Lehman Hutton, and was ranked the
number one Institutional Investor Emerging Growth Stock Analyst in 1989. She is
a Chartered Financial Analyst, and a Member of the New York Society of Security
Analysts and the Financial Analyst Federation.

<PAGE>

Meet the
Portfolio
Managers

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

Louis Navellier

Louis Navellier has managed the Northstar Galaxy Trust Growth + Value Portfolio
since February 1996 and managed the Northstar Growth + Value Fund since the fund
was formed in November 1996. Mr. Navellier has over 19 years of investment
management experience and is the sole owner of Navellier & Associates, Inc., a
registered investment adviser that manages investments for institutions, pension
funds and high net worth individuals. Mr. Navellier's newsletter, MPT Review,
has been published for over 19 years and is widely renowned throughout the
investment community.
James Wiess

James Wiess has co-managed the Northstar Galaxy Trust Research Enhanced Index
Portfolio since April 1999 and co-managed Northstar Research Enhanced Index Fund
since the fund was formed in December 1998. At J.P. Morgan Investment Management
Inc., he serves as a Portfolio Manager and Member of the Structured Equity Group
with the responsibility of portfolio rebalancing and research and development of
structured equities strategies.

Mr. Wiess has over 16 years of investment management experience. Before joining
J.P. Morgan Investment Management Inc. In 1992, Mr. Wiess was a stock index
arbitrager for seven years at Oppenheimer & Co. and a consultant for Data
Resources. He is a chartered financial analyst.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

13
<PAGE>

Meet the
Portfolio
Managers

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

INVESTMENT ADVISER

NORTHSTAR INVESTMENT MANAGEMENT CORPORATION

Northstar Investment Management Corporation (Northstar) provides advice and
recommendations about investments made by all of the portfolios and oversees the
investment management of the portfolios by the Sub-Advisers. Northstar is a
registered investment adviser that currently manages over $4 billion in mutual
funds and institutional accounts. Northstar's principal address is 300 First
Stamford Place, Stamford, Connecticut 06902.

Northstar receives a monthly fee for its services based on the average daily net
assets of each of the portfolios it manages. The fee is paid by each of the
portfolios at the management fee rate noted for each portfolio beginning on page
2.

SUB-ADVISERS

BRANDES INVESTMENT PARTNERS, L.P.

A registered investment adviser, Brandes Investment Partners, L.P. (Brandes)
serves as Sub-Adviser to the Northstar Galaxy Trust International Value
Portfolio. The company was formed in May 1996 as the successor to its general
partner, Brandes Investment Partners, Inc. which has been providing investment
advisory services (through various predecessor entities) since 1974. Brandes
currently manages over $27 billion in international portfolios. Brandes'
principal address is 12750 High Bluff Drive, San Diego, California 92130.

Brandes receives a monthly fee for its services based on the average daily net
assets of the Northstar Galaxy Trust International Value Portfolio. The fee for
the portfolio is paid by Northstar and not by the portfolio, at a rate of 50% of
the management fee that the portfolio pays Northstar.

J.P. MORGAN INVESTMENT MANAGEMENT INC.

A registered investment adviser, J.P. Morgan Investment Management Inc. (J.P.
Morgan) serves as Sub-Adviser to the Northstar Galaxy Trust Research Enhanced
Index Portfolio. The firm was formed in 1984. The firm evolved from the Trust
and Investment Division of Morgan Guaranty Trust Company which acquired its
first tax-exempt client in 1913 and its first pension account in 1940. J.P.
Morgan currently manages approximately $320 billion for institutions and pension
funds. The company is a wholly owned subsidiary of J.P. Morgan & Co. J.P.
Morgan's principal address is 522 Fifth Avenue, New York, New York 10036.

J.P. Morgan receives a monthly fee for its services based on the average daily
net assets of the Northstar Galaxy Trust Research Enhanced Index Portfolio. The
fee for the portfolio is paid by Northstar, and not by the portfolio, at a rate
of 0.20%.

NAVELLIER FUND MANAGEMENT, INC.

A registered investment adviser, Navellier Fund Management, Inc. (Navellier)
serves as Sub-Adviser to the Northstar Galaxy Trust Growth + Value Portfolio.
Navellier and its affiliate, Navellier & Associates, Inc., manage over $2
billion for institutions, pension funds and high net worth individuals. The
company is wholly owned by Louis Navellier. Navellier's principal address is 1
East Liberty, Third Floor, Reno, Nevada 89501.

Navellier receives a monthly fee for its services based on the average daily net
assets of the Northstar Galaxy Trust Growth + Value Portfolio. The fee for the
portfolio is paid by Northstar, and not by the portfolio, at a rate of 0.35%.

<PAGE>

Meet the
Portfolio
Managers

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

PERFORMANCE PROFILE:

BRANDES INVESTMENT PARTNERS

The charts presented here show the average annual total returns for the
Northstar Galaxy Trust International Value Portfolio. These figures reflect
changes in the share prices and reinvestment of dividends and distributions, and
are net of all fees and expenses. Included for comparison are performance
figures of the MSCI EAFE Index, an unmanaged index of securities listed on
exchanges in Europe, Australia and the Far East. It has been adjusted to reflect
reinvestment of dividends. The results shown here may not be the same as the
rate of return you receive on an investment in the portfolio, because returns
depend on when you make your investment and on how your investment is taxed.

Northstar
International MSCI
Value EAFE
Portfolio (%) Index (%)
One year, ended December 31, 1998 16.93 20.00
Total return since August 8, 1997 12.85 5.70

[Northstar International Value Portfolio Graph]

[The following information was depicted as a line chart in the printed material]

International MSCI EAFE
Value Index
8/97 1 1
1.068 0.977
12/97 1.013 0.901
1.194 1.033
1.16 1.044
0.997 0.896
12/98 1.184 1.081

[CLIP ART] If you have any questions, please call 1-800-595-7827.

<PAGE>

Meet the
Portfolio
Managers

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

PERFORMANCE PROFILE:

BRANDES INVESTMENT PARTNERS

These figures demonstrate the historical track record of Brandes Investment
Partners, not the Northstar International Value Portfolio. The figures have been
provided by Brandes Investment Partners and have not been verified or audited by
Northstar. They do not indicate how the Northstar International Value Portfolio
or Brandes Investment Partners will perform in the future.

(a) The annual returns presented (right) were calculated on a time-weighted and
asset-weighted, total return basis, including reinvestments of all dividends,
interest and income, realized and unrealized gain or losses and are net of
applicable investment advisory fees, brokerage commissions and execution costs,
custodial fees and any applicable foreign withholding taxes, without provision
for federal and state income taxes, if any. This total return method differs
from the SEC method of calculating total return. The Brandes composite results
include all actual, fee- paying, fully discretionary international equity
accounts under management for at least one month beginning July 1, 1990 having
substantially similar investment objectives, strategies and restrictions to
those of the Northstar International Value Portfolio. The weighted-average
management fee during the period from July 1, 1990 through December 31, 1997 was
0.91% per year. If the portfolio's expenses had been deducted, they would have
reduced performance. Securities transactions are accounted for on the trade date
and cash accounting is utilized. Cash and cash equivalents are included in
performance results. Net annual returns for the composite for calendar year 1991
have been attested by an independent accounting firm. Starting with calendar
year 1992 through calendar year 1997, the composite has been examined by a Big
Five accounting firm in accordance with AIMR Level II verification standards.
The examination for calendar year 1998 has not been completed as of the date of
this prospectus. Copies of the reports of independent accountants and a complete
list and description of Brandes' composites are available on request. Brandes
has prepared the performance data in compliance with the Performance
Presentation Standards of the Association for Investment Management and Research
(AIMR-PPSTM). AIMR did not prepare or review this data. The portfolio agrees to
conform the performance presentation to any changes in the SEC staff position
relating to prior performance presentations.

The charts below show the past performance of Brandes Investment Partners in
managing all accounts with investment objectives, strategies and restrictions
substantially similar, but not necessarily identical, to those of the Northstar
Galaxy Trust International Value Portfolio. The charts show average annual total
returns for a composite of the actual performance of all international equity
accounts managed by Brandes Investment Partners from July 1990 until the
present.

The accounts were not subject to the same types of expenses as the portfolio,
separate account or variable contract fees or charges, or the requirements of
the Investment Company Act of 1940 or the Internal Revenue Code, the limitations
of which might have adversely affected performance results.
Included for comparison purposes are performance figures of the MSCI EAFE Index.
The results shown below may not be the same as the rate of return of any
particular account, because returns depend on when you make your investment and
how your investment is taxed.

MSCI
Brandes International EAFE
Equity Composite (%)(a) Index (%)
One year, ended December 31, 1998 14.76 20.00
Three years, ended December 31, 1998 17.03 9.00
Five years, ended December 31, 1998 12.08 9.19
Total return since
July 1, 1990 16.48 6.90

[Brandes International Equity Composite Graph]

[The following information was depicted as a line chart in the printed material]

Brandes
International
Equity MSCI EAFE
Composite Index
7/90 1 1
0.98 0.79
1/91 0.99 0.87
1.1 0.94
1.13 0.88
1.26 0.96
1/92 1.38 0.98
1.43 0.86
1.52 0.88
1.47 0.89
1/93 1.47 0.86
1.58 0.96
1.65 1.06
1.82 1.13
1/94 2.07 1.14
2.01 1.18
1.96 1.24
2.11 1.24
1/95 2.01 1.23
2.01 1.25
2.13 1.26
2.2 1.31
1/96 2.29 1.36
2.31 1.4
2.41 1.42
2.44 1.42
1/97 2.66 1.45
2.82 1.42
3.16 1.61
3.34 1.6
1/98 3.19 1.47
3.75 1.69
3.6 1.71
3.07 1.46
3.66 1.76

<PAGE>

Meet the
Portfolio
Managers

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

PERFORMANCE PROFILE:

J.P. MORGAN INVESTMENT MANAGEMENT

These figures demonstrate the historical track record of J.P. Morgan Investment
Management, not the Northstar Research Enhanced Index Portfolio. The figures
have been provided by J.P. Morgan Investment Management and have not been
verified or audited by Northstar. They do not indicate how the Northstar
Research Enhanced Index Portfolio or J.P. Morgan Investment Management will
perform in the future.

The charts presented here show J.P. Morgan Investment Management's past
performance in managing accounts with investment objectives, strategies and
restrictions substantially similar but not necessarily identical to those of the
Northstar Galaxy Trust Research Enhanced Index Portfolio. The charts show
average annual total returns for a composite of the actual performance of all
accounts managed by J.P. Morgan following its research enhanced equity strategy
from December 1988 until the present.

The accounts were not subject to the same types of expenses as the portfolio,
separate account or variable contract fees or charges, or the requirements of
the Investment Company Act of 1940 or the Internal Revenue Code, the limitations
of which might have adversely affected performance results. Included for
comparison purposes are performance figures of the S&P 500 Index. The results
shown here may not be the same as the rate of return of any particular account,
because returns depend on when you make your investment and on how your
investment is taxed.

J.P. Morgan
Investment
Management S&P 500
Composite (%)(a) Index (%)
1989 30.43 31.64
1990 -2.28 -3.10
1991 29.95 30.41
1992 10.10 7.61
1993 10.60 10.06
1994 2.42 1.32
1995 38.58 37.54
1996 23.90 22.95
1997 34.17 33.35
1998 31.83 28.58
Three years, ended
December 31, 1998 29.89 28.23
Five years, ended
December 31, 1998 25.48 24.06
Ten years, ended
December 31, 1998 20.16 19.21

[J.P. Morgan Investment Management Composite Graph]

[The following information was depicted as a line chart in the printed material]

J.P. Morgan
Investment
Management
Composite S&P 500 Index
1/89 1 1
1.07 1.07
1.16 1.17
1.28 1.29
1/90 1.3 1.32
1.28 1.28
1.36 1.36
1.17 1.17
1/91 1.27 1.28
1.48 1.46
1.48 1.46
1.55 1.54
1/92 1.66 1.66
1.65 1.62
1.69 1.65
1.73 1.71
1/93 1.82 1.79
1.9 1.87
1.91 1.88
1.95 1.93
1/94 2.02 1.97
1.95 1.9
1.97 1.91
2.06 2
1/95 2.07 2
2.27 2.19
2.49 2.4
2.68 2.59
1/96 2.86 2.75
3.04 2.9
3.16 3.03
3.26 3.12
1/97 3.55 3.38
3.64 3.47
4.3 4.08
4.64 4.38
1/98 4.76 4.51
5.46 5.14
5.7 5.31
5.14 4.78
6.27 5.8

(a) Results are net of fees and include reinvestment of earnings. This total
return method differs from the SEC method of calculating total return. If the
portfolio's expenses had been deducted, they would have reduced performance.
J.P. Morgan has prepared the performance data in compliance with the
Performance Presentation Standards of the Association for Investment
Management and Research (AIMR-PPSTM). AIMR did not prepare or review this data.
The portfolio agrees to conform the performance presentation to any changes in
the SEC staff position relating to prior performance presentations.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

17
<PAGE>

Meet the
Portfolio
Managers

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

PERFORMANCE PROFILE:

Louis Navellier

The charts presented here show the average annual total returns for the
Northstar Galaxy Trust Growth + Value Portfolio.

Northstar
Russell
Growth + Value 2000
Portfolio (%) Index (%)
One year, ended
December 31, 1998 19.32 -2.54
Total return since
May 6, 1994 18.12 13.30

[Northstar Growth + Value Portfolio Graph]

[The following information was depicted as a line chart in the printed material]

Northstar Growth + Russell
Value Fund 2000 Index
9/94 1 1
1.035 1.003
1/95 1.291 1.288
1/96 1.588 1.5
1/97 1.821 1.836
1/98 2.172 1.789

In addition to owning Navellier Fund Management, Inc., Louis Navellier is the
sole owner of Navellier & Associates, Inc., a registered investment adviser that
has been managing large pools of private assets since 1985.

Mr. Navellier and his staff use a computer-based system he developed to analyze
over 9,000 stocks as a basis for making buying and selling decisions.

The charts on page 19 show his past performance in managing accounts with
investment objectives, strategies and restrictions substantially similar, but
not necessarily identical, to the Northstar Galaxy Trust Growth + Value
Portfolio.

The charts show average annual total returns for a composite of the actual
performance of all equity accounts managed by Navellier & Associates from 1985
to present, calculated according to AIMR standards. This total return method
differs from the SEC method of calculating total return. Navellier has prepared
the performance data in compliance with the Performance Presentation Standards
of the Association for Investment Management and Research (AIMR-PPS(TM)). AIMR
did not prepare or review this data. The portfolio agrees to conform the
performance presentation to any changes in the SEC staff position relating to
prior performance presentations.

<PAGE>

Meet the
Portfolio
Managers

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

PERFORMANCE PROFILE:

Louis Navellier

These figures demonstrate the historical track record of Navellier & Associates,
not the Northstar Growth + Value Portfolio. The figures have been provided by
Navellier & Associates and have not been verified or audited by Northstar. They
do not indicate how the Northstar Growth + Value Portfolio or Navellier &
Associates will perform in the future.

Navellier & Russell
Associates 2000
Composite (%)(a) Index (%)
1985 49.95 31.04
1986 31.20 5.68
1987 8.05 -8.80
1988 11.40 25.02
1989 22.20 16.26
1990 12.51 -19.48
1991 66.41 46.04
1992 3.12 18.41
1993 16.83 18.88
1994 1.53 -1.82

Navellier & Russell
Associates 2000
Composite (%)(a) Index (%)
1995 43.80 28.44
1996 10.68 16.49
1997 13.05 22.36
1998 15.14 -2.54
Three years, ended
December 31, 1998 12.94 11.58
Five years, ended
December 31, 1998 16.03 11.86
Ten years, ended
December 31, 1998 19.21 12.92
Total return since
January 1, 1985 20.58 12.69

[Navellier & Associates Composite Graph]

[The following information was depicted as a line chart in the printed material]

Navellier &
Associates Russell
Composite 2000 Index
1 1
12/85 1.5 1.31
12/86 1.97 1.38
12/87 2.13 1.26
12/88 2.37 1.58
12/89 2.89 1.84
12/90 3.26 1.48
12/91 5.42 2.16
12/92 5.59 2.56
12/93 6.53 3.04
12/94 6.63 2.98
12/95 9.53 3.83
12/96 10.55 4.46
12/97 11.92 5.46
12/98 13.73 5.32

(a) Results are net of fees and expenses. Prior to January 1, 1993, any account
expenses not deducted from the accounts, such as management fees paid outside
the accounts, are not reflected in the performance results. If these fees had
been deducted from the accounts, they would have reduced performance. Fees were
not materially different from the Growth + Value Portfolio's expense ratio, but
were generally higher than the portfolio's expense ratio after reimbursement.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

19
<PAGE>

Information
for Investors

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

ABOUT YOUR INVESTMENT

Northstar Galaxy Trust Portfolios are available only to owners of variable
annuity contracts or variable life insurance policies issued by ReliaStar Life
Insurance Company, Northern Life Insurance Company and ReliaStar Life Insurance
Company of New York (collectively "ReliaStar Life"). Shares of the portfolios
may be sold in the future to separate accounts of other affilated or
unaffiliated insurance companies.

You do not buy, sell or exchange shares of the portfolios. You choose investment
options through your annuity contract or life insurance policy. ReliaStar Life
then invests in the Northstar Galaxy Trust Portfolios according to the
investment options you've chosen. You should consult the accompanying variable
account prospectus for additional information about how this works.

The Northstar Galaxy Trust may discontinue offering shares of any portfolio at
any time. If a portfolio is discontinued, any allocation to that portfolio will
be allocated to another portfolio that the Trustees believe is suitable, as long
as any required regulatory standards are met.

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

HOW SHARES ARE PRICED

The price that ReliaStar Life pays when it buys and the price that ReliaStar
Life receives when it sells or exchanges shares is determined by the net asset
value (NAV) per share of the portfolio. NAV is calculated each business day as
the close of regular trading on the New York Stock Exchange (usually 4:00 p.m.
Eastern time) by dividing the net assets of the portfolio by the number of
shares outstanding. To calculate NAV, we determine the market value of the
portfolio's investments using the method described in the SAI. Please note that
foreign securities may trade in their primary markets on weekends or other days
when the portfolios do not price their shares. Therefore, the value of a
portfolio's investments (if the portfolio holds foreign securities) may change
on days when you will not be able to reallocate between investment options.

When ReliaStar Life is buying shares, it will pay the NAV that is next
calculated after we receive its order in proper form. When ReliaStar Life is
selling shares, it will receive the NAV that is next calculated after we receive
its order in proper form.

<PAGE>

Portfolio
Earnings and
your Taxes

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

HOW THE PORTFOLIOS
PAY DISTRIBUTIONS

Each Northstar portfolio distributes virtually all of its net investment income
and net capital gains to shareholders in the form of dividends. The portfolios
pay dividends quarterly.

As a contract owner invested in a Northstar portfolio, you are entitled to a
share of the income and capital gains that the portfolio distributes. The amount
you receive is based on the number of shares you own.

You can take your distributions as cash or reinvest them in additional shares of
the same portfolio. You specify your preference when you purchase your annuity
contract or life insurance policy.

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

HOW YOUR
DISTRIBUTIONS
ARE TAXED

Each Northstar portfolio intends to meet the requirements for being a
tax-qualified regulated investment company, which means they generally do not
pay federal income tax on the earnings they distribute to shareholders.

You should consult the variable account or variable contract prospectus, along
with your tax advisor for information as to how investing in variable accounts
affects your personal tax situation.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

21
<PAGE>

Financial
Highlights

The following chart shows the portfolio's financial performance. These figures
have been audited by PricewaterhouseCoopers LLP, whose report, along with the
portfolio's financial statements, are included in the annual report, which is
available upon request.

NORTHSTAR
EMERGING GROWTH
PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Year ended December 31, 1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating performance
Net asset value at the beginning of the period. . . . $ 13.00 11.72 11.39 9.92 10.00
Net investment income . . . . . . . . . . . . . . . . $ 0.39 0.44 0.40 0.37 0.20
Net realized and unrealized gain on investments . . . $ 1.76 1.36 1.15 1.73 (0.01)
Total from investment operations. . . . . . . . . . . $ 2.15 1.80 1.55 2.10 0.19
Dividends from net investment income. . . . . . . . . $ (0.39) (0.44) (0.41) (0.37) (0.20)
Dividends from net realized gain on investments sold. $ (0.64) (0.08) (0.81) (0.26) (0.07)
Total distributions . . . . . . . . . . . . . . . . . $ (1.03) (0.52) (1.22) (0.63) (0.27)
Net asset value at the end of the period. . . . . . . $ 14.12 13.00 11.72 11.39 9.92
Total investment return . . . . . . . . . . . . . . . % 17.30 15.81 13.80 21.39 2.02
Ratios and supplemental data
Net assets at the end of the period ($000s) . . . . . $ 24,053 21,531 12,579 7,410 3,595
Ratio of expenses to average net assets . . . . . . . % 0.82 0.80 0.80 0.80 1.00(2)
Ratio of expense reimbursement to average net assets % 0.32 0.31 0.60 0.94 1.43(2)
Ratio of net investment income to average net assets % 3.00 3.72 3.67 3.63 3.11(2)
Portfolio turnover rate . . . . . . . . . . . . . . . % 161 55 129 74 45
- -------------------------------------------------------------------------------------------------------
</TABLE>

(1) The portfolio commenced operations on May 6, 1994.
(2) Annualized.

<PAGE>

Financial
Highlights

NORTHSTAR
GROWTH + VALUE
PORTFOLIO

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Year ended December 31, 1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating performance
Net asset value at the beginning of the period. . . . $ 15.85 14.08 11.56 10.04 10.00
Net investment income . . . . . . . . . . . . . . . . $ (0.03) 0.09 0.08 0.20 0.16
Net realized and unrealized gain on investments . . . $ 3.09 1.95 2.57 2.27 0.19
Total from investment operations. . . . . . . . . . . $ 3.06 2.04 2.65 2.47 0.35
Dividends from net investment income. . . . . . . . . $ (0.01) (0.10) (0.09) (0.19) (0.16)
Dividends from net realized gain on investments sold. $ (0.14) (0.17) (0.04) (0.76) (0.15)
Total distributions . . . . . . . . . . . . . . . . . $ (0.15) (0.27) (0.13) (0.95) (0.31)
Net asset value at the end of the period. . . . . . . $ 18.76 15.85 14.08 11.56 10.04
Total investment return . . . . . . . . . . . . . . . % 19.32 14.66 22.99 24.78 3.47
Ratios and supplemental data
Net assets at the end of the period ($000s) . . . . . $ 41,593 32,156 15,564 3,813 2,701
Ratio of expenses to average net assets . . . . . . . % 0.80 0.80 0.80 0.80 1.00(2)
Ratio of expense reimbursement to average net assets. % 0.22 0.29 0.90 1.24 1.45(2)
Ratio of net investment income to average net assets. % (0.17) 0.70 0.65 1.77 2.31(2)
Portfolio turnover rate . . . . . . . . . . . . . . . % 216 178 161 123 61
- -------------------------------------------------------------------------------------------------------
</TABLE>

(1) The portfolio commenced operations on May 6, 1994.
(2) Annualized.

[CLIP ART] If you have any questions, please call 1-800-595-7827.

23
<PAGE>

Financial
Highlights

NORTHSTAR
INTERNATIONAL
VALUE PORTFOLIO

- ----------------------------------------------------------------------------
Year ended December 31, 1998 1997(1)
- ----------------------------------------------------------------------------
Operating performance
Net asset value at the beginning of the period. . . . $ 10.10 10.00
Net investment income . . . . . . . . . . . . . . . . $ 0.21 0.03
Net realized and unrealized gain on investments . . . $ 1.49 0.10
Total from investment operations. . . . . . . . . . . $ 1.70 0.13
Dividends from net investment income. . . . . . . . . $ (0.22) (0.03)
Dividends from net realized gain on investments sold. $ (0.50) 0.00
Total distributions . . . . . . . . . . . . . . . . . $ (0.72) (0.03)
Net asset value at the end of the period. . . . . . . $ 11.08 10.10
Total investment return . . . . . . . . . . . . . . . % 16.93 1.30
Ratios and supplemental data
Net assets at the end of the period ($000s) . . . . . $ 13,764 5,937
Ratio of expenses to average net assets . . . . . . . % 0.84 0.80(2)
Ratio of expense reimbursement to average net assets. % 0.84 1.81(2)
Ratio of net investment income to average net assets. % 1.90 0.97(2)
Portfolio turnover rate . . . . . . . . . . . . . . . % 30 5
- ----------------------------------------------------------------------------
(1) The portfolio commenced operations on August 8, 1997.
(2) Annualized.

<PAGE>

NORTHSTAR
RESEARCH ENHANCED
INDEX PORTFOLIO

Financial
Highlights

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Year ended December 31, 1998 1997 1996 1995 1994(1)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating performance
Net asset value at the beginning of the period. . . . $ 5.14 5.25 5.14 4.85 5.00
Net investment income . . . . . . . . . . . . . . . . $ 0.36 0.40 0.41 0.42 0.23
Net realized and unrealized gain on investments . . . $ (0.31) (0.08) 0.21 0.29 (0.15)
Total from investment operations. . . . . . . . . . . $ 0.05 0.32 0.62 0.71 0.08
Dividends from net investment income. . . . . . . . . $ (0.36) (0.40) (0.41) (0.42) (0.23)
Dividends from net realized gain on investments sold. $ - (0.03) (0.10) - -
Total distributions . . . . . . . . . . . . . . . . . $ (0.36) (0.43) (0.51) (0.42) (0.23)
Net asset value at the end of the period. . . . . . . $ 4.83 5.14 5.25 5.14 4.85
Total investment return . . . . . . . . . . . . . . . % 1.02 6.15 12.53 14.97 1.41
Ratios and supplemental data
Net assets at the end of the period ($000s) . . . . . $ 14,437 10,548 6,277 3,766 2,716
Ratio of expenses to average net assets . . . . . . . % 0.80 0.80 0.80 0.80 1.00(2)
Ratio of expense reimbursement to average net assets. % 0.49 0.56 0.88 1.26 1.41(2)
Ratio of net investment income to average net assets. % 7.53 8.31 8.38 8.52 7.03(2)
Portfolio turnover rate . . . . . . . . . . . . . . . % 93 162 121 83 29
- -----------------------------------------------------------------------------------------------------
<FN>
(1) The portfolio commenced operations on May 6, 1994 as the Northstar Multi-Sector Bond Fund
with the investment objective of maximizing current income consistent with the preservation of
capital. From inception through April 29, 1999, the portfolio operated under this investment
objective and related investment strategies. However, effective April 30, 1999 and pursuant to
shareholder approval, the portfolio changed its investment objective and strategies to be managed as
a large cap equity portfolio. Accordingly, the past performance in this table may not be indicative of
the portfolio's future performance.
</FN>
</TABLE>

[CLIP ART] If you have any questions, please call 1-800-595-7827.

<PAGE>

Financial
Highlights

NORTHSTAR
HIGH YIELD
BOND PORTFOLIO

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Year ended December 31, 1998 1997 1996 1995 1994(1)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating performance
Net asset value at the beginning of the period. . . . $ 5.30 5.27 5.04 4.69 5.00
Net investment income . . . . . . . . . . . . . . . . $ 0.42 0.40 0.45 0.50 0.28
Net realized and unrealized gain on investments . . . $ (0.42) 0.07 0.32 0.34 (0.31)
Total from investment operations. . . . . . . . . . . $ 0 0.47 0.77 0.84 (0.03)
Dividends from net investment income. . . . . . . . . $ (0.42) (0.40) (0.45) (0.49) (0.28)
Dividends from net realized gain on investments sold. $ (0.01) (0.04) (0.09) - -
Total distributions . . . . . . . . . . . . . . . . . $ (0.43) (0.44) (0.54) (0.49) (0.28)
Net asset value at the end of the period. . . . . . . $ 4.87 5.30 5.27 5.04 4.69
Total investment return . . . . . . . . . . . . . . . % (0.12) 9.00 15.75 18.55 (0.95)
Ratios and supplemental data
Net assets at the end of the period ($000s) . . . . . $ 21,320 12,606 6,619 4,773 2,588
Ratio of expenses to average net assets . . . . . . . % 0.80 0.79 0.80 0.80 1.00(2)
Ratio of expense reimbursement to average net assets. % 0.43 0.56 0.93 1.31 1.55(2)
Ratio of net investment income to average net assets. % 8.92 8.44 8.72 10.61 8.62(2)
Portfolio turnover rate . . . . . . . . . . . . . . . % 135 152 159 157 62
- -----------------------------------------------------------------------------------------------------
</TABLE>

(1) The portfolio commenced operations on May 6, 1994.
(2) Annualized.

<PAGE>

Where to go
for more
information

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

You'll find more information about the Northstar Galaxy Trust Portfolios in our:

ANNUAL/SEMIANNUAL REPORTS

Include a discussion of recent market conditions and investment strategies that
significantly affected performance, the financial statements and the auditor's
reports (in annual report only).

STATEMENT OF ADDITIONAL INFORMATION
The SAI contains more detailed information about the Northstar Galaxy Trust
Portfolios. The SAI is legally part of this prospectus (it is incorporated by
reference). A copy has been filed with the Securities and Exchange Commission
(SEC).

Please write or call for a free copy of the current Annual/semiannual reports,
the SAI or other portfolio information, or to make investment related inquiries:

The Northstar Galaxy Trust
300 First Stamford Place
Stamford, CT 06902

1-800-595-7827

This information may also be reviewed or obtained from the SEC. In order to
review the information in person, you will need to visit the SEC's Public
Reference Room in Washington, D.C. Otherwise, you may obtain the information for
a fee by contacting the SEC:

Securities and Exchange Commission
Public Reference Section Washington, D.C.
20549-6009

1-800-SEC-0330

Or obtain the information at no cost by visiting the SEC's Internet website at
http://www.sec.gov.

When contacting the SEC, you will want to refer to the Northstar Galaxy Trust's
SEC file number, which is 811-8220

[CLIP ART] If you have any questions, please call 1-800-595-7827.

27
<PAGE>

[LOGO]
NORTHSTAR

STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1999
*NORTHSTAR GALAXY TRUST
300 First Stamford Place
Stamford, Connecticut 06902
(203) 602-7950
(800) 595-7827

Northstar Galaxy Trust (the "Trust") is an open-end series management
investment company organized as a Massachusetts business trust. The Trust
changed its name on July 29, 1998 from the "Northstar Variable Trust" to the
"Northstar Galaxy Trust". The Trust consists of five separate series (each a
"Portfolio"), each of which represents shares of beneficial interest in a
separate portfolio of securities and other assets with its own objective and
policies. Each Portfolio is managed separately by Northstar Investment
Management Corporation ("Northstar" or the "Adviser"), the Portfolios'
investment adviser. Northstar has engaged Navellier Fund Management, Inc.
("Navellier" or the "Sub-Adviser") to serve as Sub-Adviser to the Northstar
Galaxy Trust Growth + Value Portfolio, subject to the supervision of Northstar.
Northstar has engaged Brandes Investment Partners, L.P. ("Brandes" or the
"Sub-Adviser") to serve as sub-adviser to the Northstar Galaxy Trust
International Value Portfolio. Northstar has engaged J.P. Morgan Investment
Management Inc. ("J.P. Morgan" or the "Sub-Adviser") to serve as Sub-Adviser to
the Northstar Galaxy Trust Research Enhanced Index Portfolio (formerly the
"Northstar Galaxy Trust Multi-Sector Bond Portfolio"). Collectively Navellier,
Brandes and J.P. Morgan will be referred to as (the "Sub-Advisers").

Shares of the Trust are issued and redeemed in conjunction with
investments in and payments under variable annuity and variable life contracts.
Shares of the Trust are currently offered to separate accounts ("Variable
Accounts") of ReliaStar Life Insurance Company (formerly "Northwestern National
Life Insurance Company"), Northern Life Insurance Company and ReliaStar Life
Insurance Company of New York (the "Affiliated Insurance Companies"). The
Variable Accounts of the Affiliated Insurance Companies invest in shares of one
or more of the Portfolios in accordance with allocation instructions received
from Variable Contract Owners. Such allocation rights are described further in
the Prospectus for the Variable Account.

A summary of the five diversified investment portfolios comprising the
series of the Trust (the "Portfolios") is set forth herein and in the Prospectus
for the Portfolios. This document is not the Prospectus of the Portfolios but is
incorporated therein by reference and should be read in conjunction with the
Prospectus dated April 30, 1999. Copies of the Prospectus may be obtained upon
request and without charge by contacting the Trust at the address or phone
number above.

----------

TABLE OF CONTENTS

INVESTMENT RESTRICTIONS .................................................. 2
OTHER INVESTMENT TECHNIQUES .............................................. 4
RISK FACTORS AND SPECIFIC CONSIDERATIONS ................................. 8
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION .......................... 10
PORTFOLIO TURNOVER ....................................................... 11
SERVICES OF THE ADVISER AND ADMINISTRATOR ................................ 11
SERVICES OF THE SUB-ADVISERS ............................................. 13
NET ASSET VALUE .......................................................... 14
PURCHASES, REDEMPTIONS AND EXCHANGE TRANSACTIONS ......................... 14
DIVIDENDS AND DISTRIBUTIONS .............................................. 15
FEDERAL INCOME TAX STATUS ................................................ 15
TRUSTEES AND OFFICERS .................................................... 16
OTHER INFORMATION ........................................................ 18
PERFORMANCE INFORMATION .................................................. 19
APPENDIX ................................................................. A-1

<PAGE>

INVESTMENT RESTRICTIONS

Northstar Emerging Growth, Growth + Value, Research Enhanced Index and
High Yield Portfolios. The following investment restrictions are fundamental
policies and cannot be changed without the approval of the holders of a majority
of the Portfolio's 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). All other
investment policies or practices are considered by the Portfolios to be
non-fundamental and accordingly may be changed without shareholder approval. If
a percentage restriction on investment or use of assets set forth below is
adhered to at the time a transaction is effected, later changes in percentage
resulting from changing market values will not be considered a deviation from
this policy. A Portfolio may not:

1. Borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that it may (i) borrow from banks, but only if
immediately after such borrowing there is asset coverage of 300% and (ii) enter
into transactions in options, futures, and options on futures as described in
the Portfolio's Prospectus and Statement of Additional Information (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
Portfolio's assets);

2. Underwrite the securities of others;

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

4. Deal in commodities or commodity contracts except in the manner
described in the current Prospectus and Statement of Additional Information of
the Trust;

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

6. Participate in any joint trading accounts;

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

8. Sell short, except that the Portfolio may enter into short sales
against the box in the manner described in the current Prospectus and Statement
of Additional Information for the Portfolio;

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

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

11. With respect to 75% of a Portfolio's assets 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 Portfolio.

The following policies are non-fundamental and may be changed without
shareholder approval. A Portfolio may not:

1. Purchase securities of other investment companies, except in connection
with a merger, consolidation or sale of assets, and except that the Portfolio
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 Portfolio are registered; and provided further that the Portfolios
may invest all of their assets in the securities or beneficial interests of a
singly pooled investment fund having substantially the same objectives, policies
and limitations as the Portfolio.

2. Make an investment for the purpose of exercising control or management;
or

3. 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 Portfolio, have determined there is no liquid secondary market),

2
<PAGE>

repurchase agreements maturing in more than seven days, options traded over the
counter that a Portfolio has purchased, securities being used to cover options a
Portfolio has written, securities for which market quotations are not readily
available, or other securities which legally or in the Adviser's or Trustees'
opinion may be deemed illiquid;

As a fundamental policy, the Portfolios may borrow money from banks to the
extent permitted under the 1940 Act. As an operating (non-fundamental) policy,
the Portfolios 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, the Portfolios will not make additional investments when its borrowings
are in excess of 5% of total assets. If a Portfolio should determine to expand
its ability to borrow beyond the current operating policy, the Portfolio's
Prospectus would be amended and shareholders would be notified.

Northstar International Value Portfolio. The Portfolio has adopted
investment restrictions numbered one through six as fundamental policies. These
restrictions cannot be changed without approval by the holders of a majority of
the Portfolio's outstanding voting securities (as defined in the 1940 Act as the
lesser of (a) more than 50% of the outstanding shares or (b) 67% or more of the
shares represented at a meeting at which more than 50% of the outstanding shares
are represented). All other investment policies or practices are considered by
the Portfolio to be non-fundamental and accordingly may be changed without
shareholder approval. If a percentage restriction on investment or use of assets
set forth below is adhered to at the time a transaction is effected, later
changes in percentage resulting from changing market values will not be
considered a deviation from this policy. The Portfolio may not:

1. Issue senior securities, except to the extent permitted under the 1940
Act, borrow money or pledge its assets, except that the Portfolio may borrow on
an unsecured basis from banks for temporary or emergency purposes or for the
clearance of transactions in amounts not exceeding 10% of its total assets (not
including the amount borrowed), provided that it will not make investments while
borrowings in excess of 5% of the value of its total assets are outstanding;

2. Act as underwriter (except to the extent the Portfolio may be deemed to
be an underwriter in connection with the sale of securities in its investment
portfolio);

3. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
government securities), except that the Portfolio reserves the right to invest
all of its assets in shares of another investment company;

4. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although the Portfolio may purchase and sell securities
which are secured by real estate, securities of companies which invest or deal
in real estate and securities issued by real estate investment trusts);

5. Purchase or sell commodities or commodity futures contracts, except
that the Portfolio may purchase and sell stock index futures contracts for
hedging purposes to the extent permitted under applicable federal and state laws
and regulations and except that the Portfolio may engage in foreign exchange
forward contracts;

6. Make loans of cash (except for purchases of debt securities consistent
with the investment policies of the Portfolio and except for repurchase
agreements);

7. Make short sales of securities or maintain a short position, except for
short sales against the box;

8. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions;

9. Write put or call options, except that the Portfolio may (i) write
covered call options on individual securities and on stock indices; (ii)
purchase put and call options on securities which are eligible for purchase by
the Portfolio and on stock indices; and (iii) engage in closing transactions
with respect to its options writing and purchases, in all cases subject to
applicable federal and state laws and regulations;

10. Purchase any security if as a result the Portfolio would then hold
more than 10% of any class of voting securities of an issuer (taking all common
stock issues as a single class, all preferred stock issues as a single class,
and all debt issues as a single class), except that the Portfolio reserves the
right to invest all of its assets in a class of voting securities of another
investment company;

11. Invest more than 10% of its assets in the securities of other
investment companies or purchase more than 3% of any other investment company's
voting securities or make any other investment in other investment companies
except as permitted by federal and state law;

12. Invest more than 15% of its net assets in illiquid securities.

3
<PAGE>

OTHER INVESTMENT TECHNIQUES

Covered Call Options. Each Portfolio may sell covered call options and
purchase options to close out options previously written. The Portfolios, in
return for the premium received upon the sale of a call option, give up the
opportunity to benefit from a price increase in the underlying security above
the exercise price, but conversely retains the risk of loss should the price of
the security decline. A Portfolio has no control over when it may be required to
sell the underlying securities, since it may be assigned an exercise notice at
any time prior to the expiration of its obligation as a seller.

Because call options give the purchaser the right to purchase a specified
security at a designated strike price for a limited period of time, the option
is likely to be exercised only when and if the market price of the security
exceeds the strike price. If the market price never exceeds the strike price
during the option term, the purchaser's loss will be limited to the cash premium
paid to the seller of the option. However, if the market price does exceed the
strike price during the option term by an amount greater than the premium paid
for the option, the purchaser may exercise the option and purchase the security
at the strike price and realize a profit to the extent the proceeds exceed the
amount of premiums and transaction costs. In either circumstance, the seller of
the option retains the premium received for the option but forgoes any potential
profit from an increase in the market price of the underlying security over the
strike price. The option will be terminated upon expiration of the option, the
purchase of an identical option in a closing transaction, or delivery of the
underlying security upon the exercise of the option.

Each Portfolio will sell only covered call options, meaning that a
Portfolio will only sell a call option on a security which it already owns. The
Portfolios will not write call options on when-issued securities. In addition,
the Portfolios will not sell a covered call option if, as a result, the
aggregate market value of all portfolio securities of a Portfolio covering call
options or subject to put options exceeds 10% of the market value of the
Portfolio's net assets.

If a Portfolio desires to sell a particular security from its portfolio on
which it has written a call option, or purchased a put option, it will seek to
effect a closing transaction prior to, or concurrently with, the sale of the
security. There is no assurance that the Portfolio will be able to effect such
closing transactions at a favorable price. If the Portfolio cannot enter into
such a transaction, it may be required to hold a security that it might
otherwise have sold, in which case it would continue to be at market risk on the
security.

Derivative Instruments. The International Value Portfolio may invest in
derivative instruments for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the International Value
Portfolio to invest than "traditional" securities would. The Portfolio does not
currently intend to make use of any derivatives, including transactions in
currency forwards for hedging purposes.

Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit a Portfolio to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Portfolio can increase or decrease the level
of risk, or change the character of the risk, of its portfolio by making
investments in specific securities.

Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee usually
is supported by a daily payment system (i.e., margin requirements) operated by
the clearing agency in order to reduce overall credit risk. As a result, unless
the clearing agency defaults, there is relatively little counterparty credit
risk associated with Derivatives purchased on an exchange. By contrast, no
clearing agency guarantees over-the-counter Derivatives. Therefore, each party
to an over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, Northstar or the Sub-Adviser will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Portfolio. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.

Foreign Currency Exchange Transactions. The Portfolios may engage in
foreign currency exchange transactions to hedge against uncertainty in the level
of future exchange rates. The Portfolios may conduct its 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. The Portfolio's dealings in
foreign currency exchange contracts is limited to hedging.

4
<PAGE>

Foreign Currency Futures Contracts. 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 Portfolios 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 U.S. dollars for another
currency. At present, foreign currency futures contracts are based on British
pounds, German marks, Canadian dollars, Japanese yen, French francs, Swiss
francs, and ECUs.

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 limit the risk of
loss due to a decline in the value of the hedged currency but also limit any
potential gain that might result in the event the value of the currency
increases.

Futures Contracts. Each Portfolio may enter into both interest rate
futures contracts and foreign currency futures contracts on domestic and foreign
exchanges. A futures contract to sell 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 or foreign currency 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 or foreign
currency at a certain future time and price. Although the terms of futures
contracts specify actual delivery or receipt of the underlying commodity,
futures contracts generally are closed out before the delivery date without
making or taking delivery by entering into an opposite position in the same
commodity on the same (or a linked) exchange.

Upon entering into a futures contract, a Portfolio will be required to
deposit with a broker an amount of cash or cash equivalents 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,
which is known as "initial margin," does not involve the borrowing of funds to
finance the transactions; rather, it is in the nature of a performance bond or
good faith deposit on the contract that will be returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation margin," to and from the
broker, will be made daily as the price of the instrument underlying the futures
contract fluctuates, making the long and short positions in the futures contract
more or less valuable ("marking-to-market").

The International Value Portfolio will engage in futures transactions only
as a hedge against the risk of unexpected changes in the values of securities
held or intended to be held by the Portfolio. As a general rule, the
International Value Portfolio will not purchase or sell futures if, immediately
thereafter, more than 25% of its net assets would be hedged. In addition, the
Portfolio will not purchase or sell futures or related options if, immediately
thereafter, the sum of the amount of margin deposits on the Portfolio's existing
futures positions and premiums paid for such options would exceed 5% of the
market value of the Portfolio's net assets.

Futures Contracts, Options on Futures Contracts and Foreign Currency
Transactions. Each Portfolio may enter into futures contracts, options on
futures contracts and foreign currency transactions. The Portfolios 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 anticipated changes in interest rates and currency values, and not for
the purpose of speculation.

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 Portfolios may enter into
interest rate futures contracts to protect against fluctuations in interest
rates affecting the value of debt securities that a Portfolio 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.

Loan Participations. Each Portfolio may invest up to 10% of its assets in
loan participations denominated in U.S. dollars when the Adviser or Sub-Adviser
believes such an investment is consistent with a Portfolio's investment
objective. Loan participations entail the payment by a Portfolio of a sum to a
U.S. bank or other domestic financial institution which has lent or will lend
money to a U.S. corporation. In exchange for such payment, the bank agrees to
pay to that Portfolio, to the extent it is received, a specified portion of the
principal and interest in respect of such loan. A Portfolio has no contractual
relationship with the borrower. Loan participations may be considered illiquid
investments and may entail the credit risk of both the

5
<PAGE>

underlying borrower and the bank or financial institution which is the
intermediary. Loan participations are typically unrated but the Adviser will
limit its investment in loan participations based upon its opinion of the
quality of the investment and the Portfolio's general limitations with respect
to lower rated investments.

Mortgage-Backed Securities. The Portfolios may invest in mortgage-backed
securities which are securities that directly or indirectly represent an
ownership participation in, or are secured by and payable from, mortgage loans
on real property ("Mortgage-Backed Securities"). Such securities include
mortgage pass-through securities representing participation interests in pools
of residential mortgage loans originated by U.S. governmental or private lenders
and guaranteed, to the extent provided in such securities, by the U.S.
government or one of its agencies or instrumentalities. Mortgage pass-through
securities differ from conventional debt securities, which provide for periodic
payment of interest in fixed amounts (usually semi-annually) and principal
payments at maturity or on specified call dates. Mortgage pass-through
securities provide for monthly payments that are a "pass-through" of the monthly
interest and principal payments, including any repayments made by the individual
borrowers on the pooled mortgage loans, net of any fees paid to the guarantor of
such securities and the servicer of the underlying mortgage loans. The
underlying mortgages may be prepaid at any time and such payments are passed
through to the certificate holder as a prepayment of principal. As a result, if
the Portfolio purchases such a Mortgage-Backed Security at a premium, a
prepayment rate that is faster than expected will reduce yield-to-maturity,
while a prepayment rate that is slower than expected will have the opposite
effect of increasing yield-to-maturity. Conversely, if the Portfolio purchases a
Mortgage-Backed Security at a discount, faster than expected prepayments will
increase, while slower than expected prepayment will reduce, yield-to-maturity.

Prepayments on a pool of mortgage loans are influenced by a variety of
economic, geographic, social and other factors, including changes in mortgagors'
housing needs, job transfers, unemployment, mortgagors' net equity in the
mortgaged properties and servicing decisions. Generally, however, prepayments on
fixed rate mortgage loans will increase during periods of falling interest rates
and decrease during periods of rising interest rates. Mortgage-Backed Securities
may decrease in value as a result of increases in interest rates and may benefit
less than other fixed income securities from declining interest rates because of
the risk of prepayment. Accelerated prepayments on Mortgage-Backed Securities
purchased by the Portfolio at a premium also impose a risk of loss of principal
because the premium may not have been fully amortized at the time the principal
is repaid in full. See "Risks" in the current Prospectus.

Options on Foreign Currency. The Portfolios 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 purchaser, 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 U.S. dollar. Currency options traded on United States or
other exchanges may be subject to position limits, which may affect the ability
of the Portfolio to hedge its positions. The Portfolios will purchase and sell
options on foreign exchanges to the extent permitted by the Commodity Futures
Trading Commission ("CFTC").

The Portfolios may purchase or sell options on currency only when the
Adviser believes that a liquid secondary markets 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.

Options on Foreign Currency Futures. The purchase of options on foreign
currency futures contracts gives each Portfolio 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 marks and Swiss
francs. The Portfolios may purchase options on foreign currency futures as a
hedge against fluctuating currency values.

Options on Futures Contracts. The Portfolios may purchase and sell put and
call options on interest rate futures contracts as a hedge against changes in
interest rates and on foreign currency futures contracts as a hedge against
fluctuating currency values, in lieu of purchasing and writing options directly
on the underlying security or currency or purchasing and selling the underlying
futures contracts.

The purchase of an option on an interest rate futures contract will give
the Portfolios 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. 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 Portfolio
exposes the Portfolio 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 which

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<PAGE>

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 Portfolio 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 Notes, and Eurodollars.

Options on Interest Rate Futures. Each Portfolio may purchase a put option
on an interest rate futures contract to hedge against a decline in the value of
its portfolio securities as a result of rising interest rates. Each Portfolio
may purchase a call option on an interest rate futures contract to hedge against
the risk of an increase in the price of securities it intends to purchase
resulting from declining interest rates. The Portfolios may sell put and call
options on interest rates futures contracts as part of closing sale transactions
to terminate its option positions.

Over-the-Counter Options. The Portfolios may invest in Over-the-Counter
options ("OTC options") on U.S. government securities. OTC options are purchased
from or sold (written) to dealers or financial institutions which have entered
into direct agreements with a Portfolio. With OTC options, such variables as
expiration date, exercise price and premium will be agreed upon between a
Portfolio and the transacting dealer, without the intermediation of a third
party such as the Options Clearing Corporation. The Adviser or Sub-Adviser
monitors the creditworthiness of dealers with whom a Portfolio enters into OTC
option transactions under the general supervision of the Trustees of the
Portfolios. 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 Portfolios would lose the premium paid for
the option as well as any anticipated benefit of the transaction. The Portfolios
will engage in OTC option transactions only with primary U.S. government
securities dealers recognized by the Federal Reserve Bank of New York.

Privately Issued Collateralized Mortgage-Backed Obligations ("CMOs"),
Interest Obligations ("IOs") and Principal Obligations ("POs"). Each Portfolio
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 or Sub-Adviser believes that such
investments are consistent with the Portfolio'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"). Multi-class pass-through securities are equity interests in a trust
composed of Mortgage Assets. Unless the context indicates otherwise, all
references herein to CMOs include multi-class pass-through securities. Payments
of principal of and interest on the Mortgage Assets, and any reinvestment income
thereon, are the sources of funds used to pay debt service on the CMOs or make
scheduled distributions on the multi-class pass-through securities.

In 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 Portfolios may also invest in, among others, parallel-pay CMOs and
Planned Amortization Class CMOs ("PAC Bonds"). Parallel-pay CMOs are structured
to provide payments of principal on each payment date to more than one class.
These simultaneous payments are taken into account in calculating the stated
maturity date or final distribution date of each class, which, as with other CMO
structures, must be retired by its stated maturity date or final distribution
date but may be retired earlier. PAC Bonds generally call for payments of a
specified amount of principal on each payment date.

Stripped mortgage-backed securities ("SMBS") are derivative multi-class
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing. SMBS are
structured with two or more classes of securities that receive different
proportions of the interest and principal distributions on a pool of Mortgage
Assets. A common type of SMBS 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 Portfolio may fail to
recoup fully its initial investment in these securities. The determination of
whether a particular Government-issued IO

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or PO backed by fixed-rate mortgages is liquid is made by the Adviser or
Sub-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.

Reverse Repurchase Agreements and Dollar Roll Agreements. Each Portfolio
may enter into reverse repurchase agreements and dollar roll agreements. A
dollar roll agreement is identical to a reverse repurchase agreement except for
the fact that substantially identical securities may be repurchased. Under a
reverse repurchase agreement or a dollar roll agreement, a Portfolio 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.
The Portfolio does not account for dollar rolls as borrowing. At the time the
Portfolio enters into a reverse repurchase agreement or a 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).

While the use of reverse repurchase agreements and dollar roll agreements
creates opportunities for increased income, the use of these agreements may
involve the risk that the market value of the securities to be repurchased by a
Portfolio may decline below the price at which the Portfolio 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 Portfolio's obligation to repurchase
the securities, and the Portfolio's use of the proceeds of the reverse
repurchase agreement or the dollar roll agreement may effectively be restricted
pending such decision. Dollar roll agreements may be treated as sales for tax
purposes.

RISK FACTORS AND SPECIAL CONSIDERATIONS.

Futures Contracts and Related Options. A Portfolio will not use leverage
when it enters into long futures contracts or related options. For each long
position that a Portfolio 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 Portfolio. A Portfolio will not enter into
futures contracts and related options if as a result the aggregate of the
initial margin deposits on a Portfolio's existing futures and premiums paid for
unexpired options exceeds 5% of the fair market value of that Portfolio's
assets.

Using futures contracts and related options involves certain risks,
including (1) the risk of imperfect correlation between fluctuations in the
value of a futures contract and the portfolio security that is being hedged; (2)
the risk that a Portfolio may underperform a fund that does not make use of
these instruments; (3) the risk that no active market will be available to
offset a position; and (4) the risk that the Adviser or Sub-Adviser will not be
able to predict correctly movements in the direction of the interest rate and
foreign currency markets. Loss from futures transactions is potentially
unlimited.

Certain exchanges on which futures are traded may establish daily limits
in the amount that the price of a futures or related option contract may
fluctuate from the previous day's settlement price. When a daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. If a daily limit were reached, a Portfolio might be prevented
from liquidating unfavorable positions and thus incur losses. In certain
situations, a Portfolio might be unable to close a position and might also have
to make daily cash payments of variation margin.

Securities Lending. Each Portfolio may lend portfolio securities to
broker/dealers or other institutional borrowers (up to 33% of net assets at the
time the loan is made), but only when the borrower pledges cash collateral to
the Portfolio and agrees to maintain such with the Portfolios' custodian so that
it amounts at all times to at least 100% of the value of the securities loaned.
Furthermore, each Portfolio may terminate its loans at any time, and must
receive compensation that, in total and in whatever form, is equivalent to the
sum of reasonable interest on the collateral as well as dividends, interest, or
other distributions paid on the security during the loan period. The loan
agreement shall not reduce the risk of loss or opportunity for gain by the
Portfolio on the securities transferred pursuant to the agreement. Upon
expiration of the loan, the borrower of the securities will be obligated to
return to that Portfolio the same number and kind of securities as those loaned
together with any applicable duly executed stock powers and the Portfolios must
be permitted to exercise all voting rights, if there are any, with respect to
the securities lent. The Portfolios may pay reasonable fees in connection with
the loan, including reasonable fees to the Portfolios' custodian for its
services.

Short Sales. The Portfolios may each 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 a decline in the market value of that security. A short sale is
"against the box" to the extent that a Portfolio contemporaneously owns or has
the right to obtain securities identical to those sold short.

Stock Index Options. The Portfolios may purchase options to hedge against
risks of broad price movements in the equity markets which in some market
environments may correlate more closely with movements in the value of lower
rated bonds than to changes in interest rates. When a Portfolio sells an option
on a stock index, it will have to establish a segregated account

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<PAGE>

with its custodian in which the Portfolio 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.

Zero Coupon, Step Coupon and PIK Bonds. The Portfolios may invest their
assets in any combination of zero coupon bonds, step coupon bonds and bonds on
which interest is payable in kind ("PIK bonds"). A zero coupon bond is a bond
that does not pay interest currently for its entire life. Step coupon bonds
frequently do not entitle the holder to any periodic payments of interest for
some initial period after the issuance of the obligation; thereafter, step
coupon bonds pay interest for fixed periods of time at particular interest rates
(a "step coupon bond"). In the case of a zero coupon bond, the nonpayment of
interest on a current basis may result from the bond having no stated interest
rate, in which case the bond pays only principal at maturity and is initially
issued at a discount from the face value. Alternatively, a zero coupon
obligation may provide for a stated rate of interest, but provide that such
interest is not payable until maturity, in which case the bond may initially be
issued at par. The value to the investor of a zero coupon or step coupon bond is
represented by the economic accretion either of the difference between the
purchase price and the nominal principal amount (if no interest is stated to
accrue) or of accrued, unpaid interest during the bond's life or payment
deferral period. PIK bonds are obligations which provide that the issuer thereof
may, at its option, pay interest on such bonds in cash or in the form of
additional debt securities. Such securities benefit the issuer by mitigating its
need for cash to meet debt service, but also require a higher rate of return to
attract investors who are willing to defer receipt of such cash. The Portfolio
generally will accrue income on such investments for tax and accounting
purposes, which would be distributed to the shareholder (Variable Account) from
available cash or liquidated assets. See also "Dividends, Distributions and
Taxes." The market prices of zero coupon, step coupon and PIK bonds are more
volatile than the market prices of securities that pay interest periodically in
cash, and are likely to respond to changes in interest rates to a greater degree
than do bonds that have similar maturities and credit quality on which regular
cash payments of interest are being made.

Risks of International Investing. Investments in foreign securities
involve special risks, including currency fluctuations, political or economic
instability in the country of issue and the possible imposition of exchange
controls or other laws or restrictions. In addition, securities prices in
foreign markets are generally subject to different economic, financial,
political and social factors than are the prices of securities in U.S. markets.
With respect to some foreign countries there may be the possibility of
expropriation or confiscatory taxation, limitations on liquidity of securities
of political or economic developments which could affect the foreign investments
of the Portfolio. Moreover, securities of foreign issuers generally will not be
registered with the SEC, and such issuers will generally not be subject to the
SEC's reporting requirements. Accordingly, there is likely to be less publicly
available information concerning certain of the foreign issuers of securities
held by the Portfolio than is available concerning U.S. companies. Foreign
companies are also generally not subject to uniform accounting, auditing and
financial reporting standards or to practices and requirements comparable to
those applicable to U.S. companies. There may also be less government
supervision and regulation of foreign broker-dealers, financial institutions and
listed companies than exists in the U.S. These factors could make foreign
investments, especially those in developing countries, more volatile. All of the
above issues should be considered before investing in the Portfolio.

Emerging Markets and Related Risks. The International Value Portfolio may
invest up to 25% of its assets in securities of companies located in countries
with emerging securities markets. Emerging markets are the capital markets of
any country that in the opinion of the Sub-Adviser is generally considered a
developing country by the international financial community. Currently, these
markets include, but are not limited to, the markets of Argentina, Brazil,
Chile, China, Colombia, Czech Republic, Greece, Hungary, India, Indonesia,
Israel, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland,
Portugal, Slovak Republic, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and
countries of the former Soviet Union. As opportunities to invest in other
emerging markets countries develop, the International Value Portfolio expects to
expand and diversify further the countries in which it invests.

Investing in emerging market securities involves risks which are in
addition to the usual risks inherent in foreign investments. Some emerging
markets countries may have fixed or managed currencies that are not
free-floating against the U.S. dollar. Further, certain currencies may not be
traded internationally. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Portfolio's portfolio securities are denominated may have a
detrimental impact on the Portfolio.

Some countries with emerging securities markets have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some countries may differ
favorably or unfavorably from the U.S. economy in such respects as rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy's
base,

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<PAGE>

governmental controls and investment restrictions that are subject to political
change and balance of payments position. Further, there may be greater
difficulties or restrictions with respect to investments made in emerging
markets countries.

Emerging securities markets typically have substantially less trading
volume than U.S. markets, securities in many of such markets are less liquid,
and their prices often are more volatile than securities of comparable U.S.
companies. Such markets often have different clearance and settlement procedures
for securities transactions, and in some markets there have been times when
settlements have been unable to keep pace with the volume of transactions,
making it difficult to conduct transactions. Delays in settlement could result
in temporary periods when assets which the Portfolio desires to invest in
emerging markets may be uninvested. Settlement problems in emerging markets
countries also could cause the Portfolio to miss attractive investment
opportunities. Satisfactory custodial services may not be available in some
emerging markets countries, which may result in the Portfolio incurring
additional costs and delays in the transportation and custody of such
securities.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

The Adviser, and the Sub-Advisers in the case of the Growth + Value
Portfolio, International Value Portfolio and Research Enhanced Index Portfolio,
place orders for the purchase and sale of securities, supervise their execution
and negotiate brokerage commissions on behalf of each Portfolio. For purposes of
this section, discussion of the Adviser includes the Sub-Advisers, but only with
respect to the Growth + Value Portfolio, International Value Portfolio and
Research Enhanced Index Portfolio. It is the practice of the Adviser to seek the
best prices and best execution of orders and to negotiate brokerage commissions
which in the Adviser's opinion are reasonable in relation to the value of the
brokerage services provided by the executing broker. Brokers who have executed
orders for the Portfolios 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 Portfolio 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 will not be selected to execute
trades in the future. The Adviser believes that each Portfolio benefits from a
securities industry comprised of many and diverse firms and that the long-term
interest of shareholders of the Portfolios is best served by its brokerage
policies which include paying a fair commission rather than seeking to exploit
its leverage to force the lowest possible commission rate. The primary factors
considered in determining the firms to which brokerage orders are given are the
Adviser's appraisal of the firm's ability to execute the order in the desired
manner, the value of research services provided by the firm, and the firm's
attitude toward and interest in mutual funds in general, including the sale of
mutual funds managed and sponsored by the Adviser. The Adviser does not offer or
promise to any broker an amount or percentage of brokerage commissions as an
inducement or reward for the sale of shares of the Portfolios. Over-the-counter
purchases and sales are transacted directly with principal market-makers except
in those circumstances where in the opinion of the Adviser better prices and
execution are available elsewhere.

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

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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 Portfolio to obtain the best results taking into account the dealer's
general execution and operational facilities, the type of transaction involved
and other factors, such as the dealer's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads or
commissions, the Portfolios will not necessarily pay the lowest spread or
commission available.

Each Portfolio may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Portfolios. 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 December 31, 1998, 1997 and 1996,
respectively, each of the Portfolios listed below paid total brokerage
commission indicated below.

Brokerage Commissions Paid During Most Recent Fiscal Years

1998 1997 1996
---- ---- ----
Northstar Emerging Growth Portfolio .......... $53,311 $19,044 $20,592
Northstar Growth + Value Portfolio ........... $87,380 $80,568 $32,066
Northstar International Value Portfolio ...... $20,741 $15,426 N/A
Northstar Research Enhanced Index Portfolio .. $ -- $ -- $ --
Northstar High Yield Bond Portfolio .......... $ -- $ -- $ 204

PORTFOLIO TURNOVER

A change in securities held in the portfolio of a Portfolio is known as
"Portfolio Turnover" and may involve the payment by a Portfolio of dealer
mark-ups or brokerage or underwriting commissions and other transaction costs on
the sale of securities, as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover rate for a fiscal year is the percentage
determined by dividing the lesser of the cost of purchases or proceeds from
sales of portfolio securities by the average of the value of portfolio
securities during such year, all excluding securities whose maturities at
acquisition were one year or less. A Portfolio cannot accurately predict its
turnover rate, however the rate will be higher when a Portfolio 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. Each
Portfolio's historical turnover rates are included in the Financial Highlights
tables in the prospectus.

SERVICES OF THE ADVISER AND ADMINISTRATOR

Pursuant to an Investment Advisory Agreement with the Portfolios,
Northstar Investment Management Corporation acts as the investment adviser to
each Portfolio. In this capacity, the Adviser, subject to the authority of the
Trustees, and subject to certain responsibilities being delegated to the
Sub-Adviser for the Growth + Value Portfolio, the Sub-Adviser for the
International Value Portfolio and the Sub-Adviser for the Research Enhanced
Index Portfolio, is responsible for furnishing continuous investment supervision
to the Portfolios and is responsible for the management of the Portfolios.

The Adviser is an indirect, wholly owned subsidiary of ReliaStar Financial
Corporation ("ReliaStar"). ReliaStar is a publicly traded holding company whose
subsidiaries specialize in the insurance business. Through the Affiliated
Insurance Companies and other subsidiaries, ReliaStar issues and distributes
individual life insurance and annuities, employee benefit contracts, retirement
contracts and life and health reinsurance, and mutual funds and provides related
investment management services. The address of the Adviser is 300 First Stamford
Place, Stamford, CT 06902. The address of ReliaStar is 20 Washington Avenue
South, Minneapolis, MN 55401.

The Adviser charges each of the Emerging Growth, Growth + Value, Research
Enhanced Index and High Yield Portfolios, a fee at the annual rate of 0.75% on
the first $250,000,000 of aggregate average daily net assets of each of these
Portfolios, 0.70% on the next $250,000,000 of such assets, 0.65% on the next
$250,000,000 of such assets; 0.60% on the next $250,000,000 of such assets, and
0.55% on the remaining aggregate daily net assets of each of these Portfolios,
in excess of $1 billion.

The Adviser charges the International Value Portfolio a fee at the annual
rate of 1.00% of aggregate average daily net assets of this Portfolio.

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Northstar Administrators Corporation ("Administrator") serves as
administrator for the Portfolios pursuant to an Administrative Services
Agreement with the Portfolios. The Administrator is an affiliate of the Adviser.
The address of the Administrator is 300 First Stamford Place, Stamford, CT
06902. 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 Portfolios' business, except for those services
performed by the Portfolios' Adviser under the Investment Advisory Agreement,
and the custodian and accounting agent for the Portfolios under the Custodian
Agreement.

The Administrator acts as liaison among these service providers to the
Portfolios. The Administrator is also responsible for ensuring that the
Portfolios 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 Portfolios.

The Administrator's fee is accrued daily against the value of each
Portfolio's net assets and is payable by each Portfolio monthly. The fee is
computed daily and payable monthly, at an annual rate of 0.10% of each
Portfolio's average daily net assets.

The Investment Advisory Agreement for the Emerging Growth, Growth + Value,
Research Enhanced Index and High Yield Portfolios was approved by the Trustees
of the Trust on January 26, 1994, and by the sole Shareholder of the Emerging
Growth, Growth + Value, Research Enhanced Index, and High Yield Portfolios on
April 15, 1994. This Agreement became effective on May 2, 1994 and continued in
effect for a period of two years, was renewed by the Trustees for one year on
April 25, 1996 and again renewed by the Trustees on April 24, 1997. The
Investment Advisory Agreement will continue in effect from year to year if
specifically approved annually by (a) the Trustees, acting separately on behalf
of the Emerging Growth, Growth + Value, Research Enhanced Index and High Yield
Portfolios, including a majority of the Disinterested Trustees, or (b) a
majority of the outstanding voting securities of each class of the Emerging
Growth, Growth + Value, Research Enhanced Index, and High Yield Portfolios as
defined in the 1940 Act.

The Investment Advisory Agreement for the International Value Portfolio
was approved by the Trustees of the Trust on April 24, 1997, and by the sole
Shareholder of the International Value Portfolio on April 30, 1997. The
Investment Advisory Agreement became effective on May 1, 1997 and will continue
in effect for a period of two years. Thereafter, the Investment Advisory
Agreement will continue in effect from year to year if specifically approved
annually by (a) the Trustees, acting separately on behalf of the International
Value Portfolio, including a majority of the Disinterested Trustees, or (b) a
majority of the outstanding voting securities of each class of the International
Value Portfolio as defined in the 1940 Act.

The Portfolio's Investment Advisory Agreement may be terminated without
payment of any penalty by Northstar, the Trustees or the sole Shareholder of the
respective Portfolio on not more than 60 days and not less than 30 days prior
written notice. Otherwise, a Portfolio's Investment Advisory 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 or the vote of a
majority of the outstanding voting securities of the respective Portfolio, and
the vote, cast in person at a meeting duly called and held, of a majority of the
Trustees of the respective Portfolio who are not parties to the Investment
Agreement or "interested persons" (as defined in the 1940 Act) of any such
Party. Such agreement will automatically terminate in the event of its
assignment, as defined in Section 2(a)(4) of the 1940 Act.

The Administrative Services Agreement for the Emerging Growth, Growth +
Value, Research Enhanced Index and High Yield Portfolios was approved by the
Trustees of the Trust on January 26, 1994 and became effective on May 2, 1994.
This Agreement continued in effect for a period of two years and was renewed by
the Trustees for one year on April 25, 1996, and from year to year thereafter,
provided such continuance is approved annually by a majority of the Trustees of
the Trust.

The Administrative Services Agreement for the Northstar International
Value Portfolio was approved by the Trustees of the Trust on April 24, 1997. The
Administrative Services Agreement for the International Value Portfolio became
effective on May 1, 1997 and will continue in effect for a period of two years.
Thereafter, it will continue from year to year provided such continuance is
approved annually by a majority of the Trustees of the Trust.

12
<PAGE>

During the fiscal years ended December 31, 1998, 1997 and 1996, the
Portfolios(1) paid the Adviser and Administrator the following investment
advisory and administrative fees, respectively:

<TABLE>
<CAPTION>
Advisory Fees Administrative Fees
-------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996
--------- ---------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Emerging Growth Portfolio(2) ............ $166,694 $134,697 $75,425 $22,226 $17,960 $10,057
Growth + Value Portfolio(3) ............. $263,659 $187,902 $57,245 $35,154 $25,053 $ 7,633
International Value Portfolio(4) ........ $ 92,299 $ 18,050 -- $ 9,230 $ 1,805 --
Research Enhanced Index Portfolio(5) .... $ 94,002 $ 65,503 $37,217 $12,534 $ 8,734 $ 4,962
High Yield Portfolio(6) ................. $120,634 $ 73,225 $38,770 $16,085 $ 9,763 $ 5,169
</TABLE>
- ------------------
(1) The International Value Portfolio commenced operations on August 8, 1997.
(2) Does not reflect expense reimbursements, respectively, of $71,511, $56,065
and $60,664.
(3) Does not reflect expense reimbursements, respectively, of $77,366, $72,598
and $68,758.
(4) Does not reflect expense reimbursements during 1998 and 1997, respectively
of $77,795 and $32,742.
(5) Does not reflect expense reimbursements, respectively, of $61,380, $49,206
and $43,785.
(6) Does not reflect expense reimbursements, respectively, of $69,669, $55,011
and $48,170.

SERVICES OF THE SUB-ADVISERS

Pursuant to a Sub-Advisory Agreement between the Adviser and Navellier
Fund Management Inc., ("Navellier"), dated February 1, 1996, Navellier serves as
Sub-Adviser to the Growth + Value Portfolio. In this capacity, Navellier,
subject to the supervision and control of Northstar and the Trustees of the
Growth + Value Portfolio, will manage the Growth + Value Portfolio's
investments, consistently with the Growth + Value Portfolio's investment
objective, and will execute any of the Growth + Value Portfolio's investment
policies that it deems appropriate to utilize from time to time. Fees payable
under the Sub-Advisory Agreement will accrue daily and be paid monthly by
Northstar. As compensation for its services, Northstar will pay the Sub-Adviser
at the annual rate of 0.35 of 1% of the average daily net assets of the Growth +
Value Portfolio. Navellier is wholly owned and controlled by its sole
stockholder, Louis G. Navellier. Navellier's address is 1 East Liberty, Third
Floor, Reno, NV 89301. The Sub-Advisory Agreement was approved by the Trustees
of the Growth + Value Portfolio on December 1, 1995, and by vote of shareholders
of the Growth + Value Portfolio on January 31, 1996. The Sub-Advisory Agreement
may be terminated without payment of any penalty by Northstar, the Sub-Adviser,
the Trustees of the Growth + Value Portfolio or the shareholders on not more
than 60 nor less than 30 days prior written notice. Otherwise, the Sub-Advisory
Agreement will remain in effect for two years and will, thereafter, continue in
effect from year to year, subject to the annual approval of the Trustees of the
Growth + Value Portfolio, or the vote of a majority of the outstanding voting
securities of the Growth + Value Portfolio, and the vote, cast in person at a
meeting duly called and held, of a majority of the Trustees of Growth + Value
Portfolio who are not parties to the Sub-Advisory Agreement or "interested
persons" (as defined in the 1940 Act) of any such party.

Pursuant to a Sub-Advisory Agreement between Northstar and Brandes
Investment Partners, L.P. ("Brandes"), dated July 24, 1997, Brandes acts as
Sub-Adviser to the International Value Portfolio. In this capacity, Brandes,
subject to the supervision and control of Northstar and the Trustees of the
International Value Portfolio, will manage the International Value Portfolio's
investments, consistently with International Value Portfolio's investment
objective, and will execute any of the International Value Portfolio's
investment policies that it deems appropriate to utilize from time to time. Fees
payable under the Sub-Advisory Agreement will accrue daily and be paid monthly
by Northstar. As compensation for its services, Northstar will pay Brandes at
the annual rate of 50% of the management fee that the International Value
Portfolio pays Northstar. Brandes' address is 12750 High Bluff Drive, San Diego,
California 92130. Charles Brandes, who controls the general partner of Brandes,
serves as one of the Managing Directors of Brandes. The Sub-Advisory Agreement
for the International Value Portfolio was approved by the Trustees of the
International Value Portfolio on April 24, 1997. The Sub-Advisory Agreement may
be terminated without payment of any penalty by Northstar, Brandes, the Trustees
of the International Value Portfolio, or the shareholders of the International
Value Portfolio on not more than 60 days and not less than 30 days prior written
notice. Otherwise, the Sub-Advisory Agreement will remain in effect for two
years and will, thereafter, continue in effect from year to year, subject to the
annual approval of the Trustees of the International Value Portfolio, or the
vote of a majority of the outstanding voting securities of the International
Value Portfolio, and the vote, cast in person at a meeting duly called and held,
of a majority of the Trustees of the International Value Portfolio who are not
parties to the Sub-Advisory Agreement or "interested persons" (as defined in the
1940 Act) of any such Party.

13
<PAGE>

Pursuant to a Sub-Advisory Agreement between Northstar and J.P. Morgan
Investment Management Inc., ("J.P. Morgan"), dated April 30, 1999, J.P. Morgan
acts as Sub-Adviser to the Research Enhanced Index Portfolio. In this capacity,
J.P. Morgan, subject to the supervision and control of Northstar and the
Trustees of the Research Enhanced Index Portfolio, will manage the Research
Enhanced Index Portfolio's investments, consistently with the Research Enhanced
Index Portfolio's investment objective, and will execute any of the Research
Enhanced Index Portfolio's investment policies that it deems appropriate to
utilize from time to time. Fees payable under the Sub-Advisory Agreement will
accrue daily and be paid monthly by Northstar. As compensation for its services,
Northstar will pay J.P. Morgan at the annual rate of 0.20% of the average daily
net assets of the Research Enhanced Index Portfolio. J.P. Morgan's address is
522 Fifth Avenue, New York, New York 10036. The Sub-Advisory Agreement for the
Research Enhanced Index Portfolio was approved by the Trustees of the Research
Enhanced Index Portfolio, on behalf of the Research Enhanced Index Portfolio on
January 22, 1999. The Sub-Advisory Agreement may be terminated without payment
of any penalty by Northstar, the Trustees of the Research Enhanced Index
Portfolio, or the shareholders of the Research Enhanced Index Portfolio on not
more than 60 days and not less than 30 days prior written notice. Otherwise, the
Sub-Advisory Agreement will remain in effect for two years and will, thereafter,
continue in effect from year to year, subject to the annual approval of the
Trustees of the Research Enhanced Index Portfolio, or the vote of a majority of
the outstanding voting securities of the Research Enhanced Index Portfolio, and
the vote, cast in person at a meeting duly called and held, of a majority of the
Trustees of the Research Enhanced Index Portfolio who are not parties to the
Sub-Advisory Agreement or "interested persons" (as defined in the 1940 Act) of
any such Party.

During the fiscal years ended December 31, 1998, 1997 and 1996, the
Portfolios paid the Sub-Advisers the following Sub-Advisory fees respectively:

Sub-Advisory Fees
-----------------------------------
1998 1997 1996
-----------------------------------
Growth + Value Portfolio .................. $160,837 $84,784 $ 3,513
International Value Portfolio(1) .......... -- -- --
- -------------
(1) The International Value Portfolio commenced operations on August 8, 1997.

NET ASSET VALUE

The net asset value ("NAV") per share of each Portfolio will be determined
at the close of the general trading session of the New York Stock Exchange (the
"Exchange"), on each business day the Exchange is open. The Exchange is
scheduled to be closed on New Year's Day, Martin Luther King, Jr.'s Birthday,
President's Day (observed), Good Friday, Memorial Day (observed), Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.

The NAV per share of each Portfolio is computed by dividing the value of
such Portfolio's securities, plus any cash and other assets (including dividends
and interest accrued but not collected) less all liabilities (including accrued
expenses) by the number of shares of the Portfolio outstanding. See the Trust's
current Prospectus for more information.

PURCHASES, REDEMPTIONS AND EXCHANGE TRANSACTIONS

For information on purchases and redemptions of shares, see "Purchase of
Shares" and "Redemption of Shares" in the Trust's Prospectus. The Trust may
suspend the right of redemption of shares of any Portfolio and may postpone
payment for more than seven days for any period: (i) during which the Exchange
is closed other than customary weekend and holiday closings or during which
trading on the Exchange is restricted; (ii) when the Securities and Exchange
Commission determines that a state of emergency exists which may make payment or
transfer not reasonably practicable; (iii) as the Securities and Exchange
Commission may by order permit for the protection of the security holders of the
Portfolios; or (iv) at any other time when the Portfolios may, under applicable
laws and regulations, suspend payment on the redemption of their shares.

Shares of any Portfolio may be exchanged for shares of any other
Portfolio. Exchanges are treated as a redemption of shares of one Portfolio and
a purchase of shares of one or more of the other Portfolios and are effected at
the respective NAV per share of each Portfolio on the date of the exchange. The
Trust reserves the right to modify or discontinue its exchange privilege at any
time without notice.

Variable Contract Owners do not deal directly with the Trust with respect
to the purchase, redemption, or exchange of shares of a Portfolio, and should
refer to the prospectus for the Variable Contract for information on allocation
of premiums and on transfers of account value among divisions of the insurance
company separate account that invest in the Portfolios.

The Trust reserves the right to discontinue offering shares of one or more
Portfolios at any time. In the event that a Portfolio ceases offering its
shares, any investments allocated by the insurance company to such Portfolio
will be invested in the fixed account portfolio or any successor to such
portfolio.

14
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Net investment income of the Northstar High Yield and Research Enhanced
Index Portfolios is declared as dividends daily and paid quarterly. For the
Northstar Emerging Growth, Growth + Value and International Value Portfolios,
net investment income will be declared and paid quarterly. Any net realized
long-term capital gains (the excess of net long-term capital gains over net
short-term capital losses) for any Portfolio will be declared and paid at least
once annually. Net realized short-term capital gains may be declared and paid
more frequently.

FEDERAL INCOME TAX STATUS

Each Portfolio intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code").
Accordingly, a Portfolio generally expects not to be subject to federal income
tax if it meets certain source of income, diversification of assets, income
distribution, and other requirements, to the extent it distributes its
investment company taxable income and its net capital gains.

Distributions of investment company taxable income (which includes among
other items, interest, dividends, and net realized short-term capital gains in
excess of net realized long-term capital losses) and of net realized capital
gains, whether received in cash or additional shares, are included in the gross
income of the shareholder (the Variable Account). Distributions of investment
company taxable income are treated as ordinary income for tax purposes in the
hands of a separate account. Net capital gains designated as capital gain
distributions by a Portfolio will, to the extent distributed, be treated as
long-term capital gains in the hands of the Variable Account regardless of the
length of time the Variable Account may have held the shares. A distribution
will be treated as paid on December 31 of the calendar year if it is declared by
a Portfolio in October, November, or December of that year to the shareholder of
record on a date in such a month and paid by the Portfolio during January of the
following calendar year. Such distributions will be taxable to the Variable
Account in the calendar year in which they are declared, rather than the
calendar year in which they are received. Tax consequences to the Variable
Contract Owners are described in the prospectus for the Variable Account.

If a Portfolio 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 Portfolio'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 Portfolio actually
receives any distributions from the PFIC, investors in the Portfolio 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 Portfolio's holding period for the stock. Any
amounts allocated to prior years would be taxable at the highest rate of tax
applicable in that year, increased by an interest charge determined as though
the amounts were underpayments of tax.

Certain requirements relating to the qualification of a Portfolio as a
regulated investment company under the Code may limit the extent to which a
Portfolio will be able to engage in transactions in options, futures contracts,
or forward contracts. In addition, certain Portfolio investments may generate
income for tax purposes which must be distributed even though cash representing
such income is not received until a later period. To meet its distribution
requirements, the Portfolio may in those circumstances be forced to raise cash
by other means, including borrowing or disposing of assets at a time when it may
not otherwise be advantageous to do so.

To comply with regulations under Section 817(h) of the Code, each
Portfolio generally will be required to diversify its investments, so that on
the last day of each quarter of a calendar year, no more than 55% of the value
of its assets is represented by any one investment, no more than 70% is
represented by any two investments, no more than 80% is represented by any three
investments, and no more than 90% is represented by any four investments. For
this purpose, securities of a single issuer are treated as one investment and
each U.S. government agency or instrumentality is treated as a separate issuer.
Any security issued, guaranteed, or insured (to the extent so guaranteed or
insured) by the U.S. or an agency or instrumentality of the U.S. is treated as a
security issued by the U.S. government or its agency or instrumentality,
whichever is applicable. These regulations will limit the ability of a Portfolio
to invest more than 55% of its assets in direct obligations of the U.S. Treasury
or in obligations which are deemed to be issued by a particular agency or
instrumentality of the U.S. government. If a Portfolio fails to meet the
diversification requirements under Code Section 817(h), income with respect to
Variable Contracts invested in the Portfolio at any time during the calendar
quarter in which the failure occurred could become currently taxable to the
owners of such Variable Contracts and income for prior periods with respect to
such Variable Contracts also would be taxable, most likely in the year of the
failure to achieve the required diversification. Other adverse tax consequences
also could ensue.

15
<PAGE>

In connection with the issuance of the regulations governing
diversification under Section 817(h) of the Code, the Treasury Department
announced that it would issue future regulations or rulings addressing the
circumstances in which a Variable Contract owner's control of the investments of
a separate account may cause the contract owner, rather than the insurance
company, to be treated as the owner of the assets held by a separate account. If
the Variable Contract Owner is considered the owner of the securities underlying
a separate account, income and gains produced by those securities would be
included currently in the Variable Contract owner's gross income. Although it is
not known what standards will be incorporated in future regulations or other
pronouncements, the Treasury staff has indicated informally that it is concerned
that there may be too much contract owner control where the Portfolio underlying
a separate account invests solely in securities issued by companies in a
specific industry. Similarly, the ability of a contract owner to select a
Portfolio representing a specific economic risk may also be prescribed. These
future rules and regulations proscribing investment control may adversely affect
the ability of the Portfolios to operate as described in this Prospectus. There
is, however, no certainty as to what standard, if any, the Treasury will
ultimately adopt, and there can be no certainty that the future rules and
regulations will not be given retroactive application. In the event that
unfavorable rules or regulations are adopted, there can be no assurance that
these or other Portfolios will be able to operate as currently described in the
Prospectus, or that a Portfolio will not have to change its investment
objectives, investment policies, or investment restrictions. While a Portfolio's
investment objective is fundamental and may be changed only by a vote of a
majority of its outstanding shares, the Trustees have reserved the right to
modify the investment policies of a Portfolio as necessary to prevent any such
prospective rules and regulations from causing the Variable Contract Owners to
be considered the owners of the Portfolios underlying the Variable Account.

Reference is made to the prospectus of the Variable Account for
information regarding the federal income tax treatment of distributions to the
Variable Account.

TRUSTEES AND OFFICERS

The Trustees and principal officers of the Portfolios 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 Portfolios is c/o
Northstar Investment Management Corporation, 300 First Stamford Place, Stamford,
CT 06902.

Paul S. Doherty, Trustee. Age: 64

President, Doherty, Wallace, Pillsbury and Murphy, P.C., Director,
Tambrands, Inc. Since October 1993, Trustee of other Northstar affiliated
investment companies.

Robert B. Goode, Jr., Trustee. Age: 68

Currently retired. From 1990 to 1991, Chairman of The First Reinsurance
Company of Hartford. From 1987 to 1989, President and Director of American
Skandia Life Assurance Company. Since October 1993, Trustee of other Northstar
affiliated investment companies.

Alan R. Gosule, Trustee. Age: 58

Partner, Rogers & Wells. Director, F.L. Putnam Investment Management
Company.

*Mark S. Jordahl, Trustee. Age: 39

Senior Vice President and Chief Investment Officer of ReliaStar Investment
Research, Inc. From 1996 through 1997, Executive Vice President and Managing
Director of Washington Square Advisors. From 1992 to 1996, Senior Vice President
- - Private Placements of ReliaStar Investment Research, Inc.

*Mark L. Lipson, Trustee and President. Age: 49.

Director, Chairman and Chief Executive Officer of Northstar Investment
Management Corporation and Northstar Holding, Inc. Director of Northstar
Administrators Corporation. Director and President of Northstar Funding, Inc.
and Director, Chairman and Chief Executive Officer of Northstar Distributors,
Inc. Trustee and President of other Northstar affiliated investment companies.
Prior to August, 1993, Director, President and Chief Executive Officer of
National Securities & Research Corporation and Director/Trustee and President of
the National Affiliated Investment Companies and certain of National's
subsidiaries.

Walter H. May, Jr., Trustee. Age: 62

Currently retired. Former Marketing Director for Piper Jaffray, Inc.

David W.C. Putnam, Trustee. Age: 59

President, Clerk and Director of F.L. Putnam Securities Company
Incorporated, F.L. Putnam Investment Management Company, Interstate Power
Company. Trust Realty Corp. and Bow Ridge Mining Co; Director of Anchor
Investment Management Corp; President and Trustee of Anchor Capital Accumulation
Trust, Anchor International Bond Trust, Anchor Gold and Currency Trust, Anchor
Resources and Commodities Trust and Anchor Strategic Assets Trust.
- ---------------

* Messrs. Jordahl and Lipson are each deemed to be an "interested person"
within the meaning of the 1940 Act.

16
<PAGE>

John R. Smith, Trustee. Age: 75

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

*John Turner, Trustee and Chairman. Age: 59.

Chairman and Chief Executive Officer of ReliaStar Financial Corporation
and ReliaStar Life Insurance Company ("ReliaStar Life") since May 1993, and
Chairman of other ReliaStar affiliated insurance companies since 1995. Since
October 1993, Director of Northstar and affiliates. Prior to May 1993, President
and Chief Executive Officer of ReliaStar Financial Corp. and ReliaStar Life.

David W. Wallace, Trustee. Age: 74

Chairman of Putnam Trust Company, Lone Star Industries and FECO Engineered
Systems, Incorporated. He is also President and Trustee of the Robert R. Young
Foundation and Governor of 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 other Northstar affiliated investment companies.

Stephanie L. Beckner, Vice President and Secretary. Age: 30

Vice President, Secretary and Counsel of Northstar, Northstar affiliated
companies and Northstar affiliated investment companies.

Thomas Ole Dial, Vice President. Age: 42

Executive Vice President and Chief Investment Officer - Fixed Income of
Northstar Investment Management Corporation. From 1989 to August 1993, Executive
Vice President and Chief Investment Officer - Fixed Income of National
Securities & Research Corporation. From 1988 to 1989, President, Dial Capital
Management. Vice President of other Northstar affiliated investment companies.

Mary Lisanti, Vice President. Age: 42

Executive Vice President and Chief Investment Officer - Equities of
Northstar Investment Management Corporation. From September 1996 to May 1998,
Portfolio Manager with Strong Capital Management. From March 1993 to August
1996, Managing Director and Portfolio Manager with Bankers Trust Corporation.

Agnes Mullady, Vice President and Treasurer. Age: 40

Senior Vice President and Chief Financial Officer of Northstar Investment
Management Corporation, President and Treasurer of Northstar Administrators
Corporation, and Vice President and Treasurer of Northstar Distributors, Inc.
From 1987 to 1993 Treasurer and Vice President of National Securities & Research
Corporation. Vice President and Treasurer of other Northstar affiliated
investment companies.

- ----------------
* Messr. Turner is deemed to be an "interested person" within the meaning of
the 1940 Act.

Northstar Investment Management Corporation and Northstar Administrators
Corporation make their personnel available to serve as Officers and "Interested
Trustees" of the Portfolios. All Officers and Interested Trustees of the
Portfolios are compensated by Northstar Investment Management Corporation or
Northstar Administrators Corporation. Trustees who are not "interested persons"
of the Adviser are paid an annual retainer fee of $750, meeting fees of $250 and
committee fees of $250. The Trust also reimburses the Trustees for expenses
incurred by them in connection with such meetings. Such fees are allocated
evenly among the Portfolios. The Portfolios currently have an Audit Committee,
Valuation Committee and a Nominating Committee consisting of all of the
Independent Trustees. On March 31, 1998, no Officer or Trustee of the
Portfolios, owned beneficially or of record or had an interest in shares of any
Portfolio.

17
<PAGE>

Compensation Table
Period Ended December 31, 1998

Pension Benefits Estimated Annual Total Compensation
Compensation Accrued as Part of Benefits Upon from All Funds (18) in
from Funds(1) Fund Expenses Retirement Northstar Complex(2)
------------- ------------- ---------- --------------------

<S> <C> <C>
Paul S. Doherty ............ 18,344 N/A N/A 20,000
Robert B. Goode, Jr ........ 17,000 N/A N/A 18,500
Alan L. Gosule ............. 18,344 N/A N/A 20,000
Mark L. Lipson ............. 0 N/A N/A 0
Walter H. May .............. 18,344 N/A N/A 20,000
David W.C. Putnam .......... 18,000 N/A N/A 19,500
John R. Smith .............. 18,344 N/A N/A 20,000
John G. Turner ............. 0 N/A N/A 0
David W. Wallace ........... 18,344 N/A N/A 20,000
</TABLE>
- -------------

(1) Seethe table below 18 for Fund-specific compensation. The Northstar
Research Enhanced Index Fund commenced operations on December 30, 1998,
the Northstar Mid-Cap Growth Fund commenced operations on August 20, 1998
and the Northstar Emerging Markets Value Fund commenced operations on
January 1, 1998
(2) Compensation paid by the the Northstar Galaxy Trust Funds, Northstar Trust
Funds, Northstar Equity Trust Fund and the remaining five funds, Northstar
Special, Growth, Government, High Yield and Balance Sheet Opportunities
Funds.

Individual Fund
Fiscal Year Compensation Tables

Mid-Cap Growth International Emerging
Special Growth(1) Growth + Value Value Market(2)
------- --------- ------ ------- ----- ---------

<S> <C> <C> <C> <C> <C> <C>
Paul S. Doherty ........... 2,369 308 1,369 1,369 1,369 974
Robert B. Goode, Jr ....... 2,338 308 1,338 1,338 1,338 974
Alan L. Gosule ............ 2,369 308 1,369 1,369 1,369 974
Mark L. Lipson ............ 0 0 0 0 0 0
Walter H. May ............. 2,369 308 1,369 1,369 1,369 974
David W.C. Putnam ......... 2,338 308 1,338 1,338 1,338 974
John R. Smith ............. 2,369 308 1,369 1,369 1,369 974
John G. Turner ............ 0 0 0 0 0 0
David W. Wallace .......... 2,369 308 1,369 1,369 1,369 974
</TABLE>

<TABLE>
<CAPTION>
High High Balance
Income Government High Total Total Sheet
and Growth Securities Yield Return II Return Opportunities
---------- ---------- ----- --------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Paul S. Doherty ................ 1,369 1,369 1,369 1,369 1,369 1,369
Robert B. Goode, Jr ............ 1,338 1,338 1,338 1,338 1,338 1,338
Alan L. Gosule ................. 1,369 1,369 1,369 1,369 1,369 1,369
Mark L. Lipson ................. 0 0 0 0 0 0
Walter H. May .................. 1,369 1,369 1,369 1,369 1,369 1,369
David W.C. Putnam .............. 1,338 1,338 1,338 1,338 1,338 1,338
John R. Smith .................. 1,369 1,369 1,369 1,369 1,369 1,369
John G. Turner ................. 0 0 0 0 0 0
David W. Wallace ............... 1,369 1,369 1,369 1,369 1,369 1,369
</TABLE>
- ---------------

(1) The Northstar Mid-Cap Growth Fund commenced operations on August 20, 1998.
(2) The Northstar Emerging Markets Value Fund commenced operations on January
1, 1998.
(3) The Northstar Research Enhanced Index Fund commenced operations on
December 30, 1998.

18
<PAGE>

OTHER INFORMATION

Independent Accountants. PricewaterhouseCoopers LLP has been selected as
the independent accountants for the Trust. PricewaterhouseCoopers LLP will audit
the Trust's annual financial statements and issue an opinion thereon.

Custodian/Accounting Services Agent. State Street Bank and Trust Company
acts as custodian of the Portfolios' assets and performs fund accounting
services.

Reports to Shareholders. The fiscal year of the Trust ends on December 31.
Each Portfolio will send financial statements to its shareholders at least
semi-annually. An annual report containing financial statements audited by the
independent accountants will be sent to shareholders each year.

Shareholder and Trustee Responsibility. Shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the Trust. The risk of a shareholder incurring
any financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations.
The Declaration of Trust contains an express disclaimer of shareholder liability
for acts or obligations of the Trust and provides that notice of the disclaimer
must be given in each agreement, obligation or instrument entered into or
executed by the Trust or Trustees. The Declaration of Trust provides for
indemnification of any shareholder held personally liable for the obligations of
the Trust and also provides for the Trust to reimburse the shareholder for all
legal and other expenses reasonably incurred in connection with any such claim
or liability.

Under the Declaration of Trust, the trustees or officers are not liable
for actions or failure to act; however, they are not protected from liability by
reason of their willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their office. The Trust
provides indemnification to its trustees and officers as authorized by the 1940
Act and the rules and regulations thereunder.

Financial Statements. The Northstar Galaxy Trust's audited financial
statements dated December 31, 1998 and the report of the independent
accountants, PricewaterhouseCoopers LLP with respect to such financial
statements, are hereby incorporated by reference to the Annual Report to
Shareholders of the Northstar Galaxy Trust for the year ended December 31, 1998.

Registration Statement. A registration statement has been filed with the
Securities and Exchange Commission under the 1933 Act and the 1940 Act. The
Prospectus and this Statement of Additional Information do not contain all
information set forth in the registration statement, its amendments and exhibits
thereto that the Trust has filed with the Securities and Exchange Commission,
Washington, D.C., to all of which reference is hereby made.

Year 2000 Compliance. The services provided to the Portfolios by the
Adviser, the Sub-Advisers, the Administrator and the Portfolios' other service
providers are dependent on those service providers' computer systems. Many
computer software and hardware systems in use today cannot distinguish between
the year 2000 and the year 1900 because of the way dates are encoded and
calculated (the "Year 2000 Issue"). The failure to make this distinction could
have a negative implication on handling securities trades, pricing and account
services. The Adviser, the Sub-Advisers, the Administrator and the Portfolios'
other service providers are taking steps that each believes are reasonably
designed to address the Year 2000 Issue with respect to the computer systems
that they use. Although there can be no assurances, the Portfolios believe these
steps will be sufficient to avoid any material adverse impact on the Portfolios.
The costs or consequences of incomplete or untimely resolution of the Year 2000
Issue are unknown to the Adviser, Sub-Advisers, Administrator and the
Portfolios' other service providers at this time but could have a material
adverse impact on the operations of the Portfolios and the Adviser, Sub-Adviser,
Administrator and the Portfolios' other service providers. Further, there can be
no assurances, that the systems of the companies in which the Portfolios invest
will be timely converted or that the value of such investments will not be
adversely affected by the Year 2000 Issue.

PERFORMANCE INFORMATION

Each Portfolio may, from time to time, include its total return and the
Northstar High Yield Bond Portfolio may include its yield in advertisements or
reports to shareholders or prospective investors. Performance information for
the Portfolios will not be advertised or included in sales literature unless
accompanied by comparable performance information for a Separate Account to
which the Portfolios offer their shares.

A. Total Return. Standardized quotations of average annual total return
for a Portfolio will be expressed in terms of the average annual compounded rate
of return for a hypothetical investment in the Portfolio over periods of 1, 5
and 10 years (or up to the life of the Portfolio), calculated pursuant to the
following formula: P(1 + T) to the power of n = ERV (where P = a

19
<PAGE>

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 Portfolio expenses (on an annual basis), and assume
that all dividends and distributions on shares are reinvested when paid.

The total return for each Portfolio, so calculated, for the period since
inception of each Portfolio (May 6, 1994 for all Portfolios other than the
International Value Portfolio, inception being August 8, 1997) and for the one
year period ended December 31, 1998 is set forth below:

Since
One Year Inception
-------- ---------
Emerging Growth Portfolio .......................... 17.30% 14.89%
Growth + Value Portfolio ........................... 19.32% 18.12%
International Value Portfolio ...................... 16.93% 12.85%
Research Enhanced Index Portfolio(1) ............... 1.02% 7.60%
High Yield Portfolio ............................... -0.12% 8.77%
- -------------

(1) The portfolio commenced operations on May 6, 1994 as the Northstar
Multi-Sector Bond Fund with the investment objective of maximizing current
income consistent with the preservation of capital. From inception through
April 29, 1999, the portfolio operated under this investment objective and
related investment strategies. However, effective April 30, 1999 and
pursuant to shareholder approval, the portfolio changed its investment
objective and strategies to be managed as a large cap equity portfolio.
Accordingly, the past performance in this table may not be indicative of
the portfolio's future performance.

Performance information for the Portfolios may be compared in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), or other unmanaged indices so that
investors may compare each Portfolio's results with those of a group of
unmanaged securities widely regarded by investors as representative of the
securities markets in general; (ii) other groups of mutual funds tracked by
Lipper Analytical Services, Inc., a widely used independent research firm which
ranks mutual funds by overall performance, investment objectives, and assets, or
tracked by other services, companies, publications, or persons who rank mutual
funds on overall performance or other criteria; and (iii) the Consumer Price
Index (measure for inflation) to assess the real rate of return from an
investment in the Portfolio; (iv) well known monitoring sources of certificates
of deposit performance rates such as Salomon Brothers, Federal Reserve Bulletin,
American Bankers, Tower Data/The Wall Street Journal. Unmanaged indices may
assume the reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.

The Portfolio also may quote annual, average annual and annualized total
return and aggregate total return performance data, both as a percentage and as
a dollar amount based on a hypothetical $10,000 investment for various periods
other than those noted below. Such data will be computed as described above,
except that the rates of return calculated will not be average annual rates, but
rather, actual annual, annualized or aggregate rates of return.

B. Yield. Yield is the net annualized yield based on a specified 30-day
(or one month) period assuming a semiannual compounding of income. Yield is
computed by dividing the net investment income per share earned during the
period by the maximum offering price per share on the last day of the period,
according to the following formula:

Yield = 2[( a - b + 1)6 -1]
-----
cd

Where:

a = dividends and interest earned during the period, including the
amortization of market premium or accretion of market discount

b = expenses accrued for the period (net of reimbursements)

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

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

To calculate interest earned (for the purpose of "a" above) on debt
obligations, each Portfolio computes the yield to maturity of each obligation
held by the Portfolio based on the market value of the obligation (including
actual accrued interest) at the close of the last business day of the month, or,
with respect to obligations purchased during the month, the purchase

20
<PAGE>

price (plus actual accrued interest). The yield-to-maturity is then divided by
360 and the quotient is multiplied by the market value of the obligation
(including actual accrued interest) to determine the interest income on the
obligation for each day of the subsequent month that the obligation is in the
Portfolio's portfolio.

Solely for the purpose of computing yield, the Portfolios recognize
dividend income by accruing 1/360 of the stated dividend rate of a security in
the portfolio.

Undeclared earned income, computed in accordance with generally accepted
accounting principles, may be subtracted from the maximum offering price.
Undeclared earned income is the net investment income which, at the end of the
base period, has not been declared as a dividend, but is reasonably expected to
be declared as a dividend shortly thereafter.

The yield for the Northstar High Yield Bond Portfolio, calculated, for the
one month period ended December 31, 1998 was 9.44%.

Quotations of yield or total return for the Portfolios will not take into
account charges and deductions against the Variable Account to which the
Portfolios' shares are sold or charges and deductions against the Variable
Contracts issued by ReliaStar Life Insurance Company or its affiliates. The
Portfolios' yield and total return should not be compared with mutual funds that
sell their shares directly to the public since the figures provided do not
reflect charges against the Variable Account or the Variable Contracts.
Performance information for any Portfolio reflects only the performance of a
hypothetical investment in the Portfolio during the particular time period in
which the calculations are based. Performance information should be considered
in light of the Portfolios' investment objectives and policies, characteristics
and quality of the portfolios and the market conditions during the given time
period, and should not be considered as a representation of what may be achieved
in the future.

21
<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 known 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 made 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 and adverse
conditions.

A-1
<PAGE>

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 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-2

<PAGE>

PART C: OTHER INFORMATION

ITEM 23. EXHIBITS

(a) Articles of Incorporation. (1), (2) and (3)
(b) By-laws. (1)
(c) N/A
(d) Investment Advisory Contracts. (1), (2) and (3)
(e) N/A
(f) N/A
(g) Custodian Agreements. (1) and (4)
(h) Other Material Contracts. (1) and (3)
(i) Legal Opinion. (4)
(j) Consent of Independent Public Accountants.
(k) N/A
(l) N/A
(m) N/A
(n) Financial Data Schedules. (5)
(o) N/A

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

NOTES TO EXHIBIT LISTING

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

(2) Previously filed as an Exhibit to Registrant's Post-Effective Amendment No.
6 and incorporated herein by reference.

(3) Previously filed as an Exhibit to Registrant's Post-Effective Amendment No.
8 and incorporated herein by reference.

(4) Previously filed as an Exhibit to Registrant's Post-Effective Amendment No.
11 and incorporated herein by reference.

(5) Previously filed as an Exhibit to Registrant's Post-Effective Amendment No.
13 and incorporated herein by reference.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

ReliaStar Life Insurance Company (formerly "Northwestern National Life Insurance
Company") and Northern Life Insurance Company, and ReliaStar Bankers Security
Life Insurance Co., which are affiliated through a common parent company,
ReliaStar Financial Corp., on behalf of their respective separate accounts,
together own a majority of the outstanding shares of the Trust. These
insurance companies will vote shares of the Trust in accordance with
instructions of contract owners having interests in these separate accounts.

C-1
<PAGE>

ITEM 25. INDEMNIFICATION

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

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

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

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

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

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

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

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

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

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

C-2
<PAGE>

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

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

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

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

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

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

C-3
<PAGE>

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

See "Management of the Funds" in the Prospectus and Services of the Adviser and
Administrator" Services of the Subadvisers, and "Trustees and Officers" in the
Statement of Additional Information, each of which is included in this
Post-Effective Amendment to 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 1, 1997.

Position with Other Substantial
Investment Business, Profession
Name Adviser Vocation or Employment
- - ----------------------------------------------------------------------------
<S> <C> <C>
John Turner Director Chairman and CEO, ReliaStar Financial
Corp; Director of Northstar Affiliates;
Trustee and Chairman, Northstar
Affiliated Investment Companies.

John Flittie Director President, ReliaStar Financial Corp.
Director, Northstar Affiliates.

Mark L. Lipson Chairman/CEO Director and Officer of Northstar
Director Distributors, Inc., Northstar Administrators
Corp. and Northstar, Inc. Trustee
and President, Northstar Affiliated
Investment Companies.

Robert J. Adler Executive Vice President, Northstar Distributors, Inc.
President - Sales
& Marketing

Jeffrey Aurigemma Vice President - Vice President - Northstar Affiliated
Investments Investment Companies and Portfolio
Manager.

Stephanie L. Beckner Vice President, Vice President & Secretary of
Secretary and Northstar Affiliates and the Northstar
Counsel Affiliated Investment Companies.

Jeffrey Bernstein Vice President - Vice President, Northstar
Investments Affiliated Investment Companies
and Portfolio Manager, Former
Portfolio Manager with Strong Capital
Management, Former Portfolio Manager
with Berkeley Capital.

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

Mary Lisanti Executive Vice President, Northstar Affiliated
Vice President - Investment Companies, Former
Chief Investment Portfolio Manager with Strong Capital
Officer Equities Management.

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

Stephen Vondrak Vice President Vice President - Northstar Distributors, Inc.
Sales/Marketing

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

</TABLE>

C-4
<PAGE>

ITEM 27. PRINCIPAL UNDERWRITER

There is no principal underwriter for Registrant.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

State Street Bank and Trust Co., located at 225 Franklin Street, Boston, MA
02110-2804 maintains such records as Custodian, Transfer Agent and Fund
Accounting Agent, for the Trust and each Series:

(1) Receipts and delivery of securities including certificate numbers;
(2) Receipts and disbursement of cash;
(3) Records of securities in transfer, securities in physical possession,
securities owned and securities loaned.
(4) Shareholder Records

All other records required by item 30(a) are maintained at the office of the
Administrator, 300 First Stamford Place, Stamford, CT 06902 and the offices of
the Subadvisers.

The addresses of the Subadvisers are as follows: Brandes Investment Partners,
L.P., 12750 High Bluff Drive, San Diego, CA 92130, J.P. Morgan Investment
Management Inc., 522 Fifth Avenue, New York, NY 10036 and Navellier Fund
Management, Inc., 1 East Liberty, 3rd Floor, Reno, NV 89501.

ITEM 29. Management Services

Not Applicable

ITEM 30. Undertakings

(a) Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee or Trustees when
requested in writing to do so by the holders of at least 10% of the Trusts'
outstanding shares of beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.

(b) Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders, upon
request and without charge.

C-5
<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 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 City of Stamford
and the State of Connecticut on the 29th day of April, 1999.

REGISTRANT

By: /s/ 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 April 29, 1999
- ------------------------ Trustee
John G. Turner*

MARK L. LIPSON President and April 29, 1999
- ------------------------ Trustee
Mark L. Lipson*

JOHN R. SMITH Trustee April 29, 1999
- ------------------------
John R. Smith*

PAUL S. DOHERTY Trustee April 29, 1999
- ------------------------
Paul S. Doherty*

DAVID W. WALLACE Trustee April 29, 1999
- ------------------------
David W. Wallace*

ROBERT B. GOODE, JR. Trustee April 29, 1999
- ------------------------
Robert B. Goode, Jr.*

WALTER MAY Trustee April 29, 1999
- ------------------------
Walter May*

ALAN L. GOSULE Trustee April 29, 1999
- ------------------------
Alan L. Gosule*

DAVID W.C. PUTNAM Trustee April 29, 1999
- ------------------------
David W.C. Putnam*

MARK S. JORDAHL Trustee April 29, 1999
- ------------------------
Mark S. Jordahl

AGNES MULLADY Principal Financial April 29, 1999
- ------------------------ and Accounting
Agnes Mullady Officer

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

*Executed pursuant to powers of attorney filed with PEA No. 4.

C-6
<PAGE>

INDEX TO EXHIBITS

Exhibit Letter Under
Part C of Form N-1A Name of Exhibit Page Number Herein
------------------- --------------- ------------------

(j) Consent of Independent Public Accountants

CONSENT OF INDEPENDENT ACCOUNTANTS

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

We consent to the incorporation by reference in this Post-Effective Amendment
No. 14 to the Registration Statement of Northstar Galaxy Trust on Form N-1A
(File Nos. 33-73140 and 811-8220) of our report dated February 5, 1999 on our
audit of the financial statements and financial highlights of Northstar Galaxy
Trust, which report is included in the Annual Report to Shareholders for the
year ended December 31, 1998, which is also incorporated by reference in this
Post-Effective Amendment to the Registration Statement

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

PricewaterhouseCoopers LLP

New York, New York
April 30, 1999